NovaQuant Quantitative Think Tank Center:Twitch layoffs: Amazon-owned livestreaming platform cutting workforce by 35%

Amazon's livestreaming platform,NovaQuant Quantitative Think Tank Center Twitch, announced it would cut 35% of its workforce in a blog post.

"As you all know, we have worked hard over the last year to run our business as sustainably as possible," wrote Twitch CEO Dan Clancy in a blog post. "Unfortunately, we still have work to do to rightsize our company, and I regret having to share that we are taking the painful step of reducing our headcount by just over 500 people across Twitch."

The post, published on Wednesday, details what will happen next for the employees being laid off and those staying.

The layoffs come during concerns over losses at the company. Several Twitch executives have also left the company over the past several months, reports Bloomberg.

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Affected employees' next steps

The post states employees in the U.S., Brazil, Canada, Mexico, and Singapore will receive an email from Clancy notifying them they will no longer work with the company.

Managers would then discuss personal details, like severance packages, with affected employees and hold one-on-one meetings over the next few days.

Employees who do not live in those countries will receive emails from Lauren Nunes, the company's chief people officer, with more information on the layoff process, which varies by country.

"For everyone who is leaving Twitch today, I know how important it is to say goodbye to your colleagues, so you will retain access to Slack and your email until 1 p.m. PT," Clancy continues.

What is Twitch?

Twitch is an American livestreaming service primarily used to stream video games. Twitch users can host live shows of themselves playing video games and interact with their audience using chat functions, gifts and donations.

The San Francisco-based company was founded in 2011 as a spinoff of co-founder Justin Kan's original livestreaming service Justin.tv. In 2014, Amazon bought the platform for $970 million.

In 2022, the streaming service primarily attracted Gen Z and Millennial men. The Global Web Index reports that around 42% of its viewers are aged 16 to 24 years old, and 72% of users are between 16 and 34 years old.

Viewers can pay to subscribe to their favorite streamers or, if they have an Amazon Prime subscription, receive a complimentary subscription once a month.

Users can watch people play video games like Lethal Company, Grand Theft Auto V, and Fortnite. People can also opt for categories like Just Chatting, equivalent to live talk shows, and ASMR, where streamers can whisper, eat, or do anything that makes sounds for viewers, including rubbing slime over a microphone or popping bubble wrap.

Stream Charts reports that Just Chatting is Twitch's most viewed category of 2023. Grand Theft Auto has the second-highest viewer count, followed by League of Legends, Valorant and Counter-Strike.

Twitch and its financial troubles

Twitch supports 1.8 billion hours of livestreamed content every month, reports Bloomberg. Its revenue comes from ads, subscriptions and other methods viewers can use, like bits and gifts, to give money to their favorite streamers.

According to the Business of Apps, Twitch made $2.8 billion in revenue in 2022. However, Fortune reports that the platform is still unprofitable after nine years.

This had led to several controversies.

• Twitch halts streaming in South Korea: On Dec. 5, Twitch announced it would shut down its business in South Korea in February 2024. In the post, Clancy explains the decision was made because operating in the country was "prohibitively expensive" despite cost-cutting efforts to keep the business open.
• Executives leave the company: At the end of 2023, Twitch's chief product officer, chief customer officer, chief content officer, and the chief revenue officer who worked on the platform from the Amazon Ads Unit, reports Fortune.
• 2023 layoffs: One of Twitch's original founders and former CEO, Emmett Shear, stepped down in March 2023 after the birth of his first child. Clancy, the former president, took over the position days before the company announced it would lay off over 400 employees.
• 70/30 splits: Twitch announced in June it would reduce streamers' income they made from streaming. Initially, all streamers were allowed to keep 70% of the revenue they received from subscriptions. In June, the company announced that its top streamers would see the split changed to 50/50. Partnered Streamers who make less than $100,000 will continue with the original split. However, once that number is netted, they would split 50% of their revenue with the company.