March 24 (Reuters) - Epic Games said on Tuesday it would cut more than 1,000 jobs after a drop in engagement for "Fortnite," its flagship title, the latest cuts in the video-game industry whose growth has stalled amid economic uncertainty.
The cuts, along with more than $500 million in savings from lower contracting and marketing spending and unfilled roles would put the company in "a more stable place," Chief Executive Tim Sweeney said in a note to employees.
The cuts are the latest in the gaming sector, where companies have faced weaker growth as consumers have been sticking with proven titles amid economic uncertainty.
But even those, especially live services games, which depend on a steady stream of new content to keep players engaged, are now showing signs of cracks.
"We've had challenges delivering consistent Fortnite magic," Sweeney said, adding "market conditions today are the most extreme" since the early days of the company founded in 1991.
"The layoffs aren't related to AI," Sweeney noted amid industry worries the technology could replace video-game developers.
The move marks Epic's second major round of layoffs in three years. In September 2023, the company cut about 830 jobs, or roughly 16% of its workforce.
It was not immediately clear what percentage of staff would be impacted by Tuesday's announcement.
The gaming sector has faced mounting pressure. In September, Electronic Arts laid off hundreds of workers and canceled a Titanfall game that was in development at its Respawn Entertainment unit, according to media reports. Amazon's broader job cuts late last year also affected its gaming division.
(Reporting by Aditya Soni and Kritika Lamba in Bengaluru; Editing by Tasim Zahid)
