Epic Games, a key partner for The Walt Disney Company, has announced that layoffs will affect more than 1,000 employees. In a memo to employees, Epic Games Founder and CEO Tim Sweeney said that a downturn in Fortnite engagement has led to Epic spending significantly more than they’re making, and that they have to make major cuts to keep the company funded. Disney acquired a $1.5 billion stake in Epic Games back in February 2024.
Layoffs at Epic Games
More than 1,000 employees will be laid off at Epic Games, CEO Tim Sweeney announced today. Sweeney said that a downturn in Fortnite engagement that began last year has led to massive losses at the company. Sweeney said that the layoffs were necessary to keep the company funded. In addition to the layoffs, Epic Games is planning more than $500 million in cost-cutting measures to stabilize the company.
In a letter to employees, Sweeney said that some challenges can be tied to industry-wide issues, while others are unique to Epic Games. One specific issue unique to Epic Games is the inability to “deliver consistent Fortnite magic every season”, according to Sweeney.
In a February 2024 statement, Disney announced a $1.5 billion investment in Epic Games. The partnership would see The Walt Disney Company and Epic Games collaborate on an all-new games and entertainment universe that will further expand the reach of beloved Disney stories and experiences.
In addition to being a world-class games experience and interoperating with Fortnite, the new persistent universe will offer a multitude of opportunities for consumers to play, watch, shop and engage with content, characters and stories from Disney, Pixar, Marvel, Star Wars, Avatar and more. Players, gamers and fans will be able to create their own stories and experiences, express their fandom in a distinctly Disney way, and share content with each other in ways that they love. This will all be powered by Unreal Engine.
Unreal Engine is used to produce assets and content across the Disney portfolio including in the development of video games like Kingdom Hearts 3 and Star Wars Jedi: Survivor; in cinematic editing and animation for film and streaming; and in the creation of more than 15 Disney Parks attractions like Millennium Falcon: Smugglers Run at Star Wars: Galaxy’s Edge.
This all builds on Epic Games’ participation in the 2017 Disney Accelerator program, which seeks to impact the future of technology and entertainment.
Here’s what former Disney CEO Bob Iger, and current Disney CEO Josh D’Amaro had to say at the time of the February 2024 announcement:
“Our exciting new relationship with Epic Games will bring together Disney’s beloved brands and franchises with the hugely popular Fortnite in a transformational new games and entertainment universe,” said Robert A. Iger, Chief Executive Officer, The Walt Disney Company. “This marks Disney’s biggest entry ever into the world of games and offers significant opportunities for growth and expansion. We can’t wait for fans to experience the Disney stories and worlds they love in groundbreaking new ways.”
“This will enable us to bring together our incredible collection of stories and experiences from across the company for a broad audience in ways we have only dreamed of before,” said Josh D’Amaro, Chairman, Disney Experiences. “Epic Games’ industry-leading technology and Fortnite’s open ecosystem will help us reach consumers where they are so they can engage with Disney in the ways that are most relevant to them.”
It’s unclear what impact the layoffs and cost-cutting measures may have on Disney’s plans.
Here’s the memo that Sweeney sent to Epic Game employees today:
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.
As always, keep checking back with us here at BlogMickey.com as we continue to bring you the latest news, photos, and info from around the Disney Parks!