Fortnite-maker Epic Games says it is laying off more than 1,000 employees, citing a fall in engagement with its popular online game.

In a note to staff on Tuesday, Epic's chief executive Tim Sweeney apologised for the cuts - attributing them to a "downturn" in Fortnite engagement beginning in 2025.

He said this had left it "spending significantly more than we're making" and needing to "make major cuts to keep the company funded".

It comes after the company recently hiked the price of Fortnite's in-game currency V-Bucks to "help pay the bills" amid increased operating costs.

Sweeney's note to staff, published on Epic's website, said the latest round of layoffs, in addition to $500m (£373m) of identified cost savings across other parts of its operations, would put the company "in a more stable place".

He added that it was facing industry-wide challenges, such as slowed growth, weakened spending, and increased competition for user engagement from other media.

But Sweeney also acknowledged Epic's "unique" struggles despite the continued popularity of Fortnite.

Among these, he said, were delivering "consistent Fortnite magic with every season" and a full mobile experience for smartphone users, after its lengthy legal battles with Apple and Google to allow the app on their marketplaces.

Fortnite returned to Apple's US App Store in 2025, nearly five years after the iPhone-maker removed it for violating its policies by launching its own in-app payment system.

"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," Sweeney said.

Epic's boss also used his letter to ward off any potential speculation about the role of increased generative AI adoption across the industry in Tuesday's cuts.

"Since it's a thing now, I should note that the layoffs aren't related to AI," Sweeney said.

"To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can."

It marks the second time in recent years that the company has laid off staff.

In September 2023, Epic said it would axe 830 roles, equating to around 16% of its workforce, citing similar struggles.

"I'm sorry we're here again," Sweeney told Epic employees in his note on Tuesday.

The cuts come amid broader layoffs across the gaming sector, affecting developers at both large and small studios.

Electronic Arts (EA) announced cuts to its teams working on its blockbuster game series Battlefield in early March.

The company told the BBC it had "made select changes within our Battlefield organisation to better align our teams around what matters most to our community".