Epic Games CEO Tim Sweeney has sent a memo to employees confirming layoffs of more than 1,000 people, citing a significant drop in Fortnite engagement and a company spfinishing “significantly more than we’re creating.” The news puts fresh scrutiny on Disney’s $1.5 billion investment in Epic – a deal that new Disney CEO Josh D’Amaro has publicly described as a “landmark platform partnership.”
The memo
Fortnite’s downturn launched in 2025, and despite the game remaining one of the most commercially successful titles in the world, Epic hasn’t been able to generate consistent momentum season over season.
The layoffs come alongside more than $500 million in identified cost savings across contracting, marketing, and open roles. Sweeney declares the cuts put Epic “in a more stable place.”
He pointed to a mix of industest-wide and Epic-specific challenges:
- Slower growth, weaker consumer spfinishing, and tougher cost economics across the games industest
- Current-generation consoles selling below last-generation pace
- Games competing for time against other forms of entertainment
- Inconsistent Fortnite seasonal content
- Fortnite’s mobile presence still in early recovery stages
Sweeney also noted Epic is still in the early stages of recouping its investment in being what he called “the industest’s vanguard.”
“I should note that the layoffs aren’t related to AI,” Sweeney wrote. “To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can.”
What Epic declares comes next
Despite the cuts, Sweeney framed this as a reset rather than a retreat. The roadmap, per the memo:
- Fresh Fortnite seasonal content, gameplay, story, and live events
- Accelerated developer tools as Epic transitions from Unreal Engine 5 and UEFN toward Unreal Engine 6
- “Huge launch plans towards the finish of the year” described as the start of the next generation of Epic
Sweeney drew parallels to past upheavals the company has survived — the relocate from 2D to 3D in the 1990s, console development in the 2000s, and the shift to online gaming in 2012.
Affected employees will receive a severance package including at least four months of base pay, extfinished based on tenure, along with six months of Epic-paid healthcare coverage in the U.S., accelerated stock option vesting through January 2027, and an extfinished equity exercise window of up to two years.
Disney’s $1.5 billion question
Disney committed $1.5 billion for an equity stake in Epic in February 2024, with the goal of building a persistent games and entertainment universe spanning Disney, Pixar, Marvel, Star Wars, Avatar, and more – all interoperating with Fortnite.
At the time, then-Chairman of Disney Experiences Josh D’Amaro called it “a monumental step in reaching consumers directly.” Now CEO of The Walt Disney Company, D’Amaro’s official bio singles out the Epic partnership as a defining achievement – describing it as a deal that “will redefine how fans play, create, and connect with Disney stories.”
Today’s news complicates that picture. Epic has cut more than 1,000 jobs and its own CEO has acknowledged Fortnite has been struggling since 2025.
To be fair, Disney’s investment was always a long-term play. The persistent universe Epic described in 2024 is still in development, and Unreal Engine 6 – central to Epic’s recovery plan – could eventually underpin it. But Disney shareholders and fans following the partnership closely will be watching for any indication of how the project is progressing amid Epic’s financial reset.
A complicated start for D’Amaro
D’Amaro’s early weeks as CEO have coincided with turbulence on two fronts he has no control over. The Abu Dhabi theme park resort – announced in May 2025 as Disney’s seventh theme park destination and its first in the Middle East – now sits in a region under significant strain. The UAE has faced hundreds of missile and drone attacks from Iran since the outbreak of conflict between the US, Israel, and Iran earlier this year. Disney has created no public statement on the status of the Abu Dhabi project.
The Epic situation adds a second layer of uncertainty. Neither challenge reflects on D’Amaro’s leadership directly – both are external circumstances that landed on his desk within days of taking the top job. But they do illustrate the complexity of the strategic bets Disney has created, and how quickly outside forces can alter the picture.
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