Epic layoffs are a bad sign, analyst says: 'If Fortnite can't make it, what chance do other games have?'

Circana's Mat Piscatella reads the writing on the wall

Another day, another awful games industry layoff. On March 24, Epic Games announced plans to cut more than 1,000 jobs, citing a "downturn in Fortnite engagement that started in 2025" along with the familiar "industry-wide challenges" CEOs love to invoke in these situations. "We're spending significantly more than we're making," said Epic CEO Tim Sweeney in a blog post about the layoffs. On its face, the idea that gamers are spending less time playing Fortnite doesn't sound like a bad thing. But the reality is more complicated.

According to statistics database Statista, Epic Games generated $6.01 billion in revenue in 2025, and Fortnite continues to top the charts for player engagement on both PlayStation and Xbox. "We have seen a dip in average hours per US Fortnite player across both PlayStation and Xbox consoles. However, it remains the game with the highest monthly active users across both platforms," Circana analyst Mat Piscatella tells Polygon. So while there has been a "downturn" in recent months, it hasn't been steep enough to knock Fortnite off the top of the console charts.

Despite the game's continued popularity, Sweeney says, "We're spending significantly more than we're making," a phrase that stood out to Piscatella as "doing the heavy lifting" in the justification for the cuts. So where's all that Fortnite money going, then? We can't say for sure, but the Epic blog post gestures toward a few possibilities.

At one point, Sweeney suggests that ongoing legal battles against Apple's App Store may be as much to blame for Epic's financial hardships as a couple of underwhelming Fortnite seasons. "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." In the past, Sweeney has been conspicuously nonchalant about losing hundreds of millions of dollars on the Epic Games Store in order to win back market share from Steam.

Sweeney adds, "Since it's a thing now, I should note that the layoffs aren't related to AI," but then says conspicuously little about how AI is used at Epic, or on Fortnite specifically. "To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can." If anything, it pretty clearly suggests Epic is using AI to "improve productivity" and assist "developers developing" — but the layoffs definitely "aren't related." Oh, ok then! Nothing to see here!

There's a lot we don't know — and will likely never know — about why these layoffs happened now. But if Fortnite truly is becoming unsustainable, that's a canary in a coal mine for the industry as a whole.

"The big live-service behemoths (including Fortnite) take up significant player count and time-share on the consoles. The top 10 live-service games on PlayStation and Xbox comprise nearly half of all US gaming hours on the platforms every month," Piscatella says. "And of course, this raises the question of if Fortnite can't make it, what chance do other games have? I do not have a good answer to that question. Heck, I don't even have a bad answer."