At the 2024 D23: The Ultimate Disney Fan Event, now Disney CEO Josh D’Amaro announced a partnership between Disney and Epic Games. This was accompanied by a $1.5 billion investment by Disney into the gaming company. Today, Epic Games CEO Tim Sweeney sent a memo to employees announcing the elimination of 1,000 jobs. This amounts to approximately 20% of Epic Games employees before the layoffs. Along with the layoffs, Epic Games also announced it was cutting $500 million in cuts.
The layoffs and cost cuts come as Epic Games faces a downturn in engagement in its popular Fortnite game. This downturn began in 2025, Sweeny shared in the memo. He also acknowledged that the company has had “challenges delivering consistent Fortnite magic with every season; we’re only in the early stages of returning to mobile and optimizing Fortnite for the world’s billions of smartphones; and in being the industry’s vanguard we have taken a lot of bullets in a battle which is only in the early days of paying off for ourselves and all developers.”
The cuts are not related to AI, Sweeny also shared. He pivoted forward, saying that what the company needs to do next is “build awesome Fortnite experiences with fresh seasonal content, gameplay, story, and live events; accelerate developer tools with greater stability and capability as we evolve from Unreal Engine 5 and UEFN to Unreal Engine 6. And we’ll be kicking off the next generation of Epic with huge launch plans towards the end of the year.”
Those who were laid off will receive severance, and Epic Games’ paid healthcare package will be extended to those who were impacted.
The layoffs and cuts come as new Disney CEO Josh D’Amaro has frequently stated that he sees Fortnite as a part of Disney’s future. He has frequently stated that there could be potential for different Disney experiences with the game, even for potential movie premieres. D’Amaro has shared how he envisions this as a way to connect with consumers directly. Already, Fortnite has begun to let fans experience stories from Disney, Pixar, Marvel, Avatar, and Star Wars. D’Amaro expects that the Epic Games experience “will redefine how fans play, create, and connect with Disney stories.”
With investments and partnerships like these, Disney tends to play the long game. This is not the first time that Epic Games has had to go through a transformation as the environments where its games live evolve. While this is a challenging moment for Epic Games, it is also a moment of possibility. This could be particularly true for Disney as it seeks to grow this ability to connect directly with consumers. More information about the partnership between Disney and Epic Games may be revealed at D23: The Ultimate Disney Fan Event this summer. This will most likely see Disney’s continued commitment to the partnership.
Today’s Layoffs
Today we’re laying off over 1000 Epic employees. I’m sorry we’re here again. The downturn in Fortnite engagement that started in 2025 means we’re spending significantly more than we’re making, and we have to make major cuts to keep the company funded. This layoff, together with over $500 million of identified cost savings in contracting, marketing, and closing some open roles puts us in a more stable place.
Some of the challenges we’re facing are industry-wide challenges: slower growth, weaker spending, and tougher cost economics; current consoles selling less than last generation’s; and games competing for time against other increasingly-engaging forms of entertainment.
And some of our challenges are unique to Epic. Despite Fortnite remaining one of the most successful games in the world, we’ve had challenges delivering consistent Fortnite magic with every season; we’re only in the early stages of returning to mobile and optimizing Fortnite for the world’s billions of smartphones; and in being the industry’s vanguard we have taken a lot of bullets in a battle which is only in the early days of paying off for ourselves and all developers.
Since it’s a thing now, I should note that the layoffs aren’t related to AI. To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can.
What we now need to do is clear: build awesome Fortnite experiences with fresh seasonal content, gameplay, story, and live events; accelerate developer tools with greater stability and capability as we evolve from Unreal Engine 5 and UEFN to Unreal Engine 6. And we’ll be kicking off the next generation of Epic with huge launch plans towards the end of the year.
This isn’t our first time being here. Epic survived upheavals in 1990’s with the move from 2D to 3D with Unreal 1; in the 2000’s building console games with Gears of War; and in 2012 moving to online gaming with Paragon and Fortnite. Each time, we rebuilt our foundations and earned a renewed leadership position.
Market conditions today are the most extreme we’ve seen since those early days, with massive upheaval in the industry accompanied by massive opportunity for the companies that come out as winners on the other side. That’s what we’re aiming to do for our players, and we aim to bring other like-minded developers in the industry along on the journey to build an increasingly open and vibrant future of entertainment together.
At Epic, we pride ourselves in only hiring the industry’s best, so it is very painful to part with so many talented people. The folks impacted by the layoffs will receive a severance package that includes at least four months of base pay, with more based on tenure. We’re also extending Epic-paid healthcare coverage.
For example, in the U.S., they’ll receive paid coverage for 6 months. We’ll also accelerate their stock options vesting through January 2027 and extend equity exercise options for up to two years.
We’ll have a company meeting Thursday to talk about the roadmap in more detail.
-Tim
