February 23, 2024

Leading Streaming Site Twitch Is Laying Off 500 Employees

According to Bloomberg, Twitch plans to trim 35% of its staff, around 500 employees, with the layoffs happening as early as this week.

This is the latest round of layoffs by the Amazon-owned streaming platform. The troubled company trimmed hundreds of jobs in 2023 amid increased operating costs, executive reshuffles, and complaints from the community.

Twitch Is On Its Third Round of Layoffs Amid Changes

Trouble at Twitch started brewing after the co-founder and long-running CEO of the company, Emmett Shear, resigned and handed over the company to the current CEO, Dan Clancy. However, the change in leadership has not been without challenges, as it coincided with the company laying off 400 employees.

Twitch announced another layoff round towards the end of last year when it shut down Crown channel, a Twitch programming run by Amazon. It also closed down its Game Growth Group, intended to support gaming creators looking to market their services.

Another looming change for Twitch is on its South Korean platform, which it intends to shut down soon. South Korea is among the largest esports markets globally, making it a prime location for streaming service providers.

However, Twitch plans to halt its offerings in this market over high network fees.

Clancy announced the closure of this platform via a blog post. The executive announced that the company was making significant losses in Korea. As such, the company would face challenges in sustaining operations.

High Operating Costs Cripple Amazon-owned Twitch

In December last year, Clancy published a lengthy blog post sharing the company’s struggle with rising operating costs. He noted that cutting off Twitch in Korea was one of the ways to lower these costs.

He noted that the company had implemented other changes before lowering costs. The first was experimenting with a peer-to-peer model for source quality to a maximum of 720b. Despite implementing these changes, Clancy noted that network fees in Korea remained ten times higher than in most countries.

“Operating costs in Korea are significantly higher than they are in other countries, and we have been open about this challenge for some time,” Clancy opined.

He further said that Twitch streamers in Korea devoted their time and effort to building their communities, and the company planned to help them find new homes. Twitch would help these streamers move their communities to other live-streaming services in Korea.

Clancy noted that a decision to shut down the Korean business was difficult as Korea continued to play a significant role in the global esports community. Twitch was among the platforms where these communities had built and enjoyed massive growth.

Despite concerns about the increasing costs, Twitch remained popular. Since the pandemic lockdowns imposed a few years ago, this platform’s users have increased significantly.

To address the rising costs, Twitch switched towards an ad revenue model that has created concern between streamers and viewers. Despite revenue from ads, Twitch still faces a challenge as it remains unprofitable since being acquired by Amazon.

Challenges at the company have caused leadership changes as the CEO position is not the only one with a replacement. In December, several executives, including the Chief Revenue Officer, resigned from the company.


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