Amazon lays off 500 Twitch employees, hundreds more at MGM and Prime Video

Twitch reportedly still unprofitable, paid over $1 billion to streamers in 2023.

Jon Brodkin – Jan 10, 2024 1:29 pm | 171

Credit: Getty Images | NurPhoto

Amazon today is laying off 500 employees at Twitch and several hundred more at its MGM and Prime Video divisions, the company announced. The 500 job cuts at Twitch reportedly amount to 35 percent of the game-focused live-streaming platform’s staff.

Twitch CEO Dan Clancy announced the cuts in a blog post and email to staff. “As you all know, we have worked hard over the last year to run our business as sustainably as possible. Unfortunately, we still have work to do to rightsize our company and I regret having to share that we are taking the painful step to reduce our headcount by just over 500 people across Twitch,” Clancy wrote.

Twitch is reportedly still unprofitable nine years after Amazon acquired it. Meanwhile, Senior VP of Prime Video and Amazon MGM Studios Mike Hopkins sent a memo to staff announcing the elimination of “several hundred roles across the Prime Video and Amazon MGM Studios organization.”

Amazon is also aiming to boost Prime Video revenue by showing ads to viewers unless they pay an extra $2.99 per month on top of their Amazon Prime subscription. Amazon completed an $8.5 billion acquisition of MGM in March 2022.

Amazon’s latest quarterly earnings report was issued in October. The company said its net sales “increased 13 percent to $143.1 billion in the third quarter.” Amazon’s net income rose to $9.9 billion in Q3 2023, compared to $2.9 billion in Q3 2022.

Amazon declined to answer specific questions about the layoffs but provided Ars with a copy of Hopkins’ memo. The Prime Video and MGM division has “identified opportunities to reduce or discontinue investments in certain areas while increasing our investment and focus on content and product initiatives that deliver the most impact,” Hopkins wrote.

Amazon previously cut 27,000 jobs

Amazon already cut 27,000 jobs in the past year or so, including 400 at Twitch in March 2023. Amazon still had about 1.5 million full-time and part-time employees globally, excluding contractors and temporary personnel.

Previous job cuts included many roles in the Amazon hardware division that makes products, including Echo, Alexa, Fire, and Kindle devices. There were also cuts in Amazon Stores and human resources.

Clancy’s memo today said that despite previous cuts at Twitch, “it has become clear that our organization is still meaningfully larger than it needs to be given the size of our business. Last year we paid out over $1 billion to streamers. So while the Twitch business remains strong, for some time now the organization has been sized based upon where we optimistically expect our business to be in 3 or more years, not where we’re at today.”

Today’s Twitch cuts are about “sizing our organization based upon the current scale of our business and conservative predictions of how we expect to grow in the future,” he wrote. The Twitch employees being laid off include workers in the US, Canada, Brazil, Mexico, Singapore, and elsewhere.

Twitch recently announced plans to stop providing service in South Korea because “sending-party-pays” fees charged by network operators made it impossible to run without a significant loss in the country.

Hopkins’ memo about the Prime Video and MGM cuts said that “our industry continues to evolve quickly and it’s important that we prioritize our investments for the long-term success of our business, while relentlessly focusing on what we know matters most to our customers.”

Layoff notifications were scheduled to be sent to affected employees this morning. “Notifications will be sent out shortly, and we expect all notifications in the Americas to be completed this morning (Pacific time), and most other regions by the end of the week,” Hopkins wrote.