Twitch, a leading streaming platform, is facing challenges that have raised concerns among its employees. The recent layoffs of nearly 1,000 jobs within the last year have brought attention to the company’s financial difficulties. Despite Amazon’s acquisition of Twitch Interactive for $1 billion in 2014, the service has failed to generate significant financial returns over the years. Reports indicate that Twitch has always struggled to be profitable, even during periods of growth such as the launch of Fortnite in 2018 and the Covid-19 pandemic. Internal documents reveal that Twitch generated approximately $667 million in ad revenue and $1.3 billion in commerce revenue in 2023, which accounted for less than 0.5% of Amazon’s total revenue for the year.
The primary cause of Twitch’s financial struggles is attributed to its challenging business model. The high infrastructural cost of supporting a large volume of livestreams, along with the difficulty of integrating advertising into long-form live video, has posed significant obstacles for the platform. The inability to be profitable despite surges in demand has raised concerns among analysts, with digital entertainment analyst Mike Hickey stating, “If you can’t be profitable when you have a surge in demand, you have something structurally wrong.”
The financial challenges faced by Twitch have resulted in significant layoffs in recent years. In 2023, Amazon laid off 400 workers from the streaming platform, followed by another 500 layoffs earlier this year. Twitch CEO Dan Clancy acknowledged that the platform was “meaningfully larger than it needs to be.” With Amazon expected to report its second-quarter results soon and an internal operations review due at Twitch this autumn, employees are concerned that a third round of layoffs may be imminent. The ongoing struggles have prompted fears that Twitch may end up becoming sidelined at Amazon, leading to the label of a “zombie brand.”
Criticism and Concerns
Employees have criticized Clancy for his actions, including embarking on international work trips to meet Twitch Creators and host livestreams while laying off employees and addressing the platform’s unprofitability. Clancy defended his actions by comparing them to the actions he would take if he were running a manufacturing company, stating that he would meet with raw material providers and customers. However, employees are concerned about the future of Twitch and the potential impact of further layoffs on the platform’s operations.
Twitch’s financial struggles and ongoing layoffs have raised significant concerns among employees about the platform’s future. The challenges posed by the business model, along with the lack of significant financial returns, have highlighted the need for strategic changes to ensure Twitch’s long-term viability. As the platform faces the possibility of becoming a “zombie brand,” employees and stakeholders are looking towards Amazon and Twitch leadership to address these challenges and work towards a sustainable future for the streaming platform.
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