Twitch, the live-streaming platform owned by Amazon, has announced a significant reduction in its workforce. The company confirmed the layoff of 500 employees, constituting 35% of its staff. Despite boasting over 35 million daily visitors, Twitch has yet to achieve profitability, leading to this drastic measure.
Twitch CEO announces layoffs
Dan Clancy, CEO of Twitch, expressed his regret in a recent blog post, stating the need to reduce the company's headcount by over 500 people. He acknowledged the painful nature of this decision, emphasising that the size of the organisation exceeded the requirements of its current business scale. This marks Twitch's second major reduction in staff within a year.
Amazon's wider layoffs and ad strategy
This latest round of layoffs at Twitch coincides with Amazon's decision to lay off hundreds of employees from Prime Video and MGM Studios. Amazon acquired Twitch in 2014 and has been making significant changes across its streaming services. The company announced plans to introduce advertisements into Prime Video, aiming to boost its streaming business.
Impact on Twitch since Clancy's leadership
Since Clancy became CEO in March 2023, Twitch has seen over 900 layoffs, reducing the workforce to nearly half its original size. The recent announcement follows the closure of Twitch operations in Korea due to high costs. Clancy has defended these decisions as necessary for the long-term sustainability of the platform.
Twitch's creator dynamics and revenue challenges
Twitch's success hinges on its creators, yet the number of active streamers has declined. From a peak of nearly 10 million creators in January 2021, the figure has dropped to below 8 million in 2023. Twitch's attempts to incentivise creators with a higher revenue share have limited scope, affecting only a tiny fraction of streamers.
The platform needs to work on monetising effectively, lagging behind competitors like YouTube in advertising revenue. While popular with viewers, Clancy's strategy to reduce ads has yet to benefit streamers significantly.
Furthermore, Twitch faces challenges in content moderation and defining its audience, as seen in its inconsistent nudity and community safety policies.
This restructuring at Twitch highlights the evolving dynamics of the streaming industry and the challenges platforms face in maintaining profitability and creator engagement.
