Another layoff’s issue is arising.
Again and again.
Following substantial job cuts in 2023 and this early 2024, a new report from The Wall Street Journal hints at another round of downsizing. This potential move comes despite Amazon’s substantial investment of nearly $1 billion in the platform, signaling deeper troubles within the streaming giant. As the platform faces dwindling engagement and revenue, the looming annual operational review adds to the uncertainty for Twitch employees.
Amazon’s Acquisition and Twitch Financial Performance
Amazon’s acquisition of Twitch in 2014 marked a significant expansion into the gaming and streaming sectors. However, Twitch’s current financial trajectory raises alarms. Despite generating about $667 million in ad revenue and $1.3 billion in commerce revenue in 2023, these figures account for less than 0.5% of Amazon’s total revenue. Internal projections suggest a potential revenue drop of nearly a quarter billion dollars by the end of 2025, highlighting the pressing need for strategic reassessment.
Spending on subscriptions has decreased, and if internal projections hold true, Twitch could face a revenue shortfall of almost a quarter billion dollars by 2025. Additionally, Twitch’s advertising sales, which experienced a surge during the pandemic, have since plateaued. This stagnation indicates a need for innovative strategies to revive and sustain growth.
According to network analytics and security firm Noka Deepfield, Twitch has significantly dropped in its ranking among US web traffic sources. From being the fourth largest source in 2014, Twitch has now fallen to the 18th position. This decline in traffic is a stark indicator of the challenges the platform faces in retaining and growing its user base.
Despite the troubling financial indicators, Twitch remains committed to long-term sustainability. Jeremy Forrester, VP of Product at Twitch, emphasized the importance of recent layoffs as a strategic move to ensure the platform’s longevity. Forrester expressed confidence in Twitch’s current position and its plans for the future, stating that the platform is structured to have a clear vision for the next few years.
A key component of Twitch’s strategy involves enhancing its mobile experience. At TwitchCon EU, the company announced the release of a new mobile app, which is now available to all users. This move addresses the growing trend of mobile usage among Twitch users. According to their blog post, over 50% of users primarily use Twitch on their phones, with 40% exclusively using mobile. The new app aims to cater to this significant segment, providing a more seamless and engaging experience for mobile users.
Layoffs and Their Implications
The announcement of 500 job cuts earlier this year and 400 layoffs in 2023 underscores the severity of Twitch’s financial struggles. Amazon’s chief executive, Andy Jassy, has conducted a profitability review of Twitch, showcasing little tolerance for unprofitable ventures. The upcoming annual operational review this autumn further fuels concerns of more job losses. Sources within Twitch worry that the platform could become a “zombie brand” at Amazon, similar to sidelined projects like Goodreads and Woot.