Epic Games lays off over 1,000 employees as Fortnite stumbles

This illustration picture shows a person waiting for an update of Epic Games' Fortnite on their smartphone in Los Angeles. (Chris Delmas/AFP/Getty Images via CNN)

Epic Games said Tuesday it was cutting more than 1,000 jobs as a slump in users for its flagship title Fortnite left the video game giant spending “significantly more” than it was making.

Chief executive Tim Sweeney announced the layoffs in a message to staff, saying the cuts - combined with more than $500 million in savings from reduced contracting, marketing and open roles - would put the company “in a more stable place.”

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“I’m sorry we’re here again,” Sweeney wrote, in an apparent reference to previous rounds of job cuts at Epic Games.

The layoffs are the latest sign of stress in the broader gaming industry, which has faced slower growth, weaker consumer spending and stiffer competition from streaming and social media platforms.

Sweeney also pointed to current-generation consoles underperforming their predecessors in sales.

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But he acknowledged challenges specific to Epic as well, saying it had struggled to deliver “consistent Fortnite magic” with each season of the game and was still in the early stages of optimising it for mobile devices.

Sweeney was keen to distance the decision from the industry’s growing reliance on artificial intelligence.

“The layoffs aren’t related to AI,” he wrote. “To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can.”