Twitch is going through the worst moment in its history. According to Bloomberg, the streaming platform, owned by Amazon, will lay off 35% of its workforce. The layoffs, which will be officially announced this week, will affect around 500 employees.
This new round of layoffs further weakens a company that already cut hundreds of jobs last year amid a management change, rising operating costs, and community discontent.
Shortly after Twitch co-founder and former CEO Emmett Shear stepped down and handed over the reins to current CEO Dan Clancy, the company laid off 400 employees. Amazon had already cut 180 jobs at the end of last year when it shut down its Crown channel, Twitch’s programming managed by Amazon, and closed its Game Growth group, which was supposed to help game creators market their work.
Just a month ago, Twitch also announced its plans to close the service in South Korea, one of the biggest esports markets in the world, due to “prohibitively expensive” network fees. In a blog post announcing the closure, Clancy wrote that the company had been operating at “significant losses” in Korea, and that there was “no way forward” to operate sustainably.
The great paradox is that, despite its enormous popularity, Twitch continues to struggle to make a profit. And it’s because its shift to prioritize advertising revenue, which has been a point of contention between viewers and streamers, has not been fruitful. According to Bloomberg, the company remains unprofitable almost a decade after Amazon acquired it. This situation is compounded by the “exodus” of Twitch executives, the latest being this past December.
The high operating costs that Twitch has to face to maintain live content on a large scale are the key. In a 2022 blog post, Clancy stated that each high-volume streamer on Twitch costs the company about $1,000 per month, citing the interactive video fees of Amazon Web Service: “Delivering high-definition, low-latency, and always available live video to almost every corner of the world is expensive.”
