In a move that underscores the continuing ripple effects of the economic downturn, Amazon.com announced on Wednesday its decision to lay off several hundred employees across its streaming and studio operations. The internal note from Mike Hopkins, the executive overseeing these units, revealed that the job cuts will impact Prime Video and Amazon MGM Studios in the Americas immediately, with affected staff in other regions receiving notifications by the end of the week.
This downsizing aligns with a broader trend of major corporations extending their workforce reductions into 2024. The e-commerce giant, Amazon, joins the ranks of companies streamlining operations, having already slashed more than 27,000 jobs last year as part of a broader wave of tech layoffs in the United States.
Hopkins, in a memo seen by CNBC, communicated the difficult decision, stating, “We moved to make cuts to prioritize our investments for the long-term success of our business.” He emphasized the company’s commitment to enhancing its entertainment offerings, focusing on content and product initiatives with the most significant impact.
Simultaneously, Amazon-owned livestreaming platform Twitch is set to cut 35% of its workforce, equating to approximately 500 jobs, as confirmed by Twitch CEO Dan Clancy in a blog post. This move is part of a series of job reductions at Twitch, which has grappled with the challenges of sustaining a large-scale website hosting 1.8 billion hours of live video content per month.
Despite relying on Amazon’s infrastructure, Twitch remains unprofitable over nine years after its acquisition by Amazon. Company insiders, requesting anonymity, disclosed that Twitch has intensified its focus on advertising and taken measures to cut expenditures. Clancy revealed in December that operations in South Korea would cease due to prohibitive costs.
In the blog post, Clancy expressed regret over the necessity of the layoffs, stating, “It has become clear that our organization is still meaningfully larger than it needs to be given the size of our business.” He acknowledged Twitch’s ongoing efforts to build a more sustainable business and highlighted the company’s significant payouts to streamers, exceeding $1 billion in 2023.
The restructuring at Twitch comes on the heels of multiple executive departures in the final months of 2023, including the chief product officer, chief customer officer, and chief content officer. Clancy, who assumed the role in March 2023, has been working to mend relations with gaming celebrities on the platform and address concerns raised by streamers.
Twitch’s struggles to achieve profitability led to two rounds of layoffs in the past year, totaling over 400 positions. Clancy defended these measures, stating they were based on conservative predictions of future growth and the current scale of the business.
Amazon’s aggressive investments in media, such as the $8.5 billion acquisition of MGM and substantial spending on original content like “The Lord of the Rings: The Rings of Power,” have made headlines. The company is set to introduce ads on Prime Video and a premium, ad-free subscription tier, mirroring moves by competitors Netflix and Disney.
In the broader context, job cuts are not limited to Amazon, as other tech giants like Microsoft have also trimmed staff in specific divisions, reflecting a strategic shift in resource allocation. Amazon’s shares, which surged over 80% last year, experienced a 1.37% increase in the afternoon following the announcement.
