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Jack Reid

Amazon Cuts Hundreds of Jobs Across Studios and Twitch

Twitch.

Amazon will lay off several hundred employees in its streaming and studio divisions as well as subsidiary Twitch in order to reduce costs amid the latest in a wave of video industry contraction.

Twitch, the video live-streaming company acquired by Amazon in 2014 will cut just over 500 roles, or 35% of its workforce, according to a blog post by Twitch CEO Dan Clancy. Prime Video and MGM Studios will eliminate “hundreds” of jobs, according to an email sent by management to employees on Wednesday morning.

“Despite these efforts, it has become clear that our organization is still meaningfully larger than it needs to be given the size of our business,” Clancy said. “[The] decision, while incredibly difficult and painful, is necessary to ensure that we can continue to serve our streamers sustainably without impacting their ability to support their careers on Twitch.”

Added Mike Hopkins, senior VP of Prime Video and Amazon MGM Studio, in his separate company email address: “We’ve 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 ... Our prioritization of initiatives that we know will move the needle, along with our continued investments in programming, marketing and product, positions our business for an even stronger future.”

Amazon said that the layoffs will be completed by the end of the week.

The cuts come just weeks before Amazon is set to roll out a new ads initiative for subscription-based Amazon Prime Video service, requiring users to pay an extra $3 per month to avoid them. 

These ads could boost annual revenue by as much as $5 billion, according to a Bank of America Analysis. Ads on Amazon’s streaming service will start appearing in North America on Jan. 29 and internationally on Feb. 5.

Amazon has spent recent years aggressively pursuing the growth of its media division, including the $8.45 billion acquisition for MGM in 2021 and over $1 billion in payouts to individual content creators by subsidiary Twitch last year. Later, it was revealed that Amazon had grossly overvalued MGM's content library, which was re-assessing it at $3.4 billion, according to a March 2022 10Q filing.

Amazon has ramped up its streaming offerings as part of its Prime package in recent years, which charges for expedited shipping and other perks.

But last year, Twitch also laid off 400 people as part of overall Amazon cuts. And in December, announced it would shut down its service in South Korea because of “prohibitively expensive” costs.

Amazon last year cut more than 27,000 jobs, part of a record-breaking wave of U.S. tech layoffs that followed industry over-expansion during the pandemic.

In total, the media industry shed over 21,000 jobs last year, the highest total for the sector since 2020, according to Challenger, Gray & Christmas, Inc.

Amazon’s shares were up 1.6% in afternoon trading. Twitch has also seen recent viewership increases

“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 three or more years, not where we’re at today,” explained Clancy in his statement. “As with many other companies in the tech space, we are now sizing our organization based upon the current scale of our business and conservative predictions of how we expect to grow in the future.”

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