Twitch confirmed on Wednesday (10) the dismissal of 35% of its employees, a total of 500 people. The information was speculated hours ago by Bloomberg, which claimed that the announcement would be made later today. Since the waves of mass layoffs from big tech, Twitch has lost more than 400 employees.
In March 2023, Twitch laid off 400 employees. These layoffs were part of Amazon’s 9,000-employee cut, the company’s second round of layoffs between 2022 and last year. In November, Amazon shut down its Crown Twitch channel and sent 180 more employees out, some of them directly connected to the platform.
Even though Twitch is a very popular platform and practically synonymous with game streaming, it still makes losses for Amazon, which bought it 10 years ago. In the statement announcing the layoffs, Dan Clancy justified that the decision was made because the “headcount is larger than the size of Twitch’s business”. Translation: the number of employees does not reflect the platform’s profit and therefore they should cut expenses.
As much as Twitch is focusing on generating ad revenue, operating costs remain high. After all, contrary to what our parents and grandparents think, the internet is not a magical place where everything is available at all times and you just have to enter a website or service and that’s it. The more users (viewers and content creators), the greater Twitch’s investment in infrastructure.
In fact, the high operating costs were the reason why the platform abandoned the South Korean market, one of the main e-sports markets in the world. According to Dan Clancy, CEO of Twitch, costs in the country were ten times higher than in other locations. Unlike the other mass layoff cases involving Amazon and Twitch, this one seems to be a decision by the platform (but with pressure from the parent company to find a way to reduce spending).
Also in the statement, Clancy explains that the decision aims to maintain Twitch’s longevity. The CEO also points out that the new staff reflects the platform’s growth expectations for 3 years or more, following conservative forecasts of the tech market.