Epic Games is laying off 1,000 employees in a bid to cut costs following a downturn in Fortnite's engagement. CEO Tim Sweeney wrote that the company was spending more than it was earning and had to make significant cuts.

The layoffs come with over $500 million in cost savings from contracting, marketing, and closing some open roles. Last week, Epic also increased the price of V-Bucks, Fortnite's in-game currency, citing higher operational costs.

While Epic says AI hasn't directly caused redundancies, industry-wide shortages and rising chip prices have indirectly hit revenues. Severance pay will be four months for all employees, with longer-term staff getting more compensation.

Epic will continue covering US-based employees' healthcare for six months post-layoff to ease the transition.