Amazon’s Twitch, is reportedly set to lay off approximately 35% of its workforce, amounting to around 500 employees. This comes as the platform struggles with financial challenges and struggles to achieve profitability, even nine years after its acquisition by Amazon for nearly $1 billion.
This move follows a financial setbacks, executive departures, and the decision to shut down operations in South Korea.
The decision to cut jobs is with a previous round of layoffs in March 2023 when over 400 positions were eliminated due to the platform’s failure to meet user engagement and revenue growth expectations.
CEO Dan Clancy, who took the helm in March 2023, has been working to address the platform’s challenges.
In December, he announced the closure of operations in South Korea, citing high operating costs and network fees.
The company’s journey from its acquisition by Amazon in 2014 to the present has seen growth. Amazon’s involvement has led to integrations, including collaborations with the subscription service Amazon Prime.
The acquisition of Curse LLC in 2016 expanded its reach, introducing new avenues for engagement. Twitch, initially a platform focused on video game streaming, experienced growth following its acquisition by Amazon in 2014 for a $970 million.
The integration with Amazon Prime and acquisitions, including Curse LLC in 2016, positioned Twitch as a force in live-streaming services.
By 2015, monthly viewership exceeded 100 million, with 27,000 partner channels by May 2018. Twitch has struggled with financial challenges, remaining unprofitable even nine years after joining the Amazon family.
The decision to cut 35% of its workforce is not the first instance of downsizing, in March of the previous year, the company laid off over 400 employees due to user and revenue growth.
The financial struggles are underlined by the platform’s inability to turn a profit, despite hosting a 1.8 billion hours of live video content each month.
Since assuming the role of CEO in March of the previous year, Dan Clancy has been at the forefront of Twitch’s efforts to address its financial woes.
Clancy’s tenure has seen a renewed focus on advertising strategies and streamlining the platform’s operations.
Despite these efforts as evidenced by the closure of operations in South Korea, where Clancy cited “prohibitively expensive” operating costs and network fees.
The company struggles have been exacerbated by the departure of executives, including the chief product officer, chief customer officer, chief revenue officer, and chief content officer.
This concerns about the platform’s internal stability and direction. Twitch has undergone its advertising approach and how it compensates streamers.
Clancy, in a 2022 blog post, revealed that streamers cost the company around $1,000 per month, addressing the financial challenges associated with delivering high-definition, low-latency, always-available live video globally.
The platform has faced criticism, particularly regarding its earlier advertising approach. Amazon, Twitch’s parent company, has been on a cost-cutting mission, with corporate job cuts in 2022 and continued reductions in 2023.
This is with a larger downturn across tech companies, where players like Google, Meta, Spotify, and Unity have also implemented large-scale layoffs.