Amazon-owned livestreaming platform Twitch is set to lay off at least 500 employees, constituting roughly 35% of its staff, according to a report by Bloomberg citing sources familiar with the matter.
The anticipated announcement of these layoffs is expected on Wednesday, January 10th, adding to a string of job cuts that have plagued the company in recent times.
The backdrop of this decision is the departure of several high-ranking executives in 2023, including the chief product officer, chief customer officer, and chief content officer.
Additionally, Twitch’s chief revenue officer, who was part of Amazon’s Ads unit, also bid farewell. The impending layoffs underscore the challenges faced by Twitch despite its immense success.
Running a platform supporting a staggering 1.8 billion hours of live video content per month is financially burdensome, even with the support of Amazon’s infrastructure, Twitch executives told Bloomberg.
Despite being under Amazon’s wing for nine years, the platform remains unprofitable, raising concerns about its long-term sustainability.
Twitch CEO Dan Clancy, who assumed the position in March 2023, has been actively working to repair relations with the gaming celebrities who contribute significantly to the platform’s success.
However, the company has faced criticism for its original approach to advertisements, leading to a reworking of its ad strategy. Despite these efforts, losses have persisted, resulting in two rounds of layoffs in the previous year, with over 400 positions eliminated.
Twitch ceases operation in South Korea
One significant development contributing to the financial strain is Twitch’s decision to cease operations in South Korea, as announced by CEO Dan Clancy in December. The exorbitant costs associated with operating in South Korea were cited as the primary reason for this move, further emphasizing the economic challenges faced by the platform.
Twitch’s focus on advertising as a major revenue source has been met with mixed success. While streamers appreciate Clancy’s efforts to address their concerns, some popular celebrities have migrated to competing platforms like Kick. The platform’s struggle to achieve profitability highlights the complexities of sustaining a large-scale streaming website.
This is not the first time Twitch has resorted to layoffs. In the previous year, the platform underwent two rounds of job cuts, aligning with broader reductions at Amazon, which initiated its largest-ever corporate job cuts in 2022, affecting 27,000 positions across the company.
The roots of Twitch’s rise can be traced back to its acquisition by Amazon in 2014 for $970 million. The platform’s success has led to the emergence of internet personalities and celebrities, making it a significant force in entertainment and community building.
Twitch’s expansion included strategic integrations with Amazon Prime and the acquisition of Curse LLC in 2016, broadening its reach and engagement avenues.
As of October 2023, Twitch ranked as the 37th most-visited website globally, drawing a substantial portion of its traffic from the United States, Germany, and South Korea.
Despite these achievements, the recent layoffs raise questions about the platform’s ability to navigate the competitive landscape and achieve long-term financial viability.
