Recent reports have indicated that Twitch employees are growing increasingly concerned about the future of the streaming platform. With nearly 1,000 jobs cut within the last year, there is a fear that Twitch may be heading towards becoming a “zombie brand”. The acquisition of Twitch Interactive by Amazon for $1 billion in 2014 has not seen the financial returns that were initially anticipated. Despite significant growth in recent years, including spikes following the launch of Fortnite in 2018 and during the Covid-19 pandemic, Twitch has struggled to turn a profit.
The Wall Street Journal reports that Twitch generated around $667 million in ad revenue and $1.3 billion in commerce revenue in 2023, amounting to less than 0.5% of Amazon’s total revenue for the year. The primary cause of these financial struggles is attributed to Twitch’s “challenging” business model. The high infrastructural costs associated with supporting a large volume of livestreams, as well as the difficulty of integrating advertising into long-form live video, have posed significant challenges for the platform.
As a result of these ongoing challenges, Twitch has seen a series of layoffs in recent years. Amazon laid off 400 workers from the streaming platform in 2023, followed by another 500 earlier this year. Internal projections suggest that Twitch could lose $250 million in revenue by the end of next year, indicating a worrying trend for the platform’s financial health. With Amazon preparing to report its second-quarter results and an internal operations review scheduled for the autumn, employees are anxious about the possibility of more layoffs on the horizon.
Employees have also raised concerns about Twitch CEO Dan Clancy’s leadership, particularly his decision to embark on international work trips to meet Twitch Creators while layoffs were taking place. Clancy defended his actions in an email to employees, citing the importance of building relationships with creators for the platform’s success. However, his response has not quelled the concerns of employees who feel that Twitch may be sidelined at Amazon due to its underperformance.
With the possibility of a third round of layoffs looming, employees at Twitch are facing an uncertain future. The platform’s struggles to turn a profit, coupled with internal projections of declining revenue, have created a sense of apprehension among employees. The fear of Twitch becoming a “zombie brand”, like previous Amazon acquisitions Goodreads and Woot, adds to the uncertainty surrounding the platform’s future.
The road ahead for Twitch appears to be fraught with challenges. The platform’s financial struggles, coupled with employee concerns about leadership decisions and the possibility of further layoffs, paint a bleak picture for the future of Twitch. As Amazon prepares to assess the performance of its various subsidiaries, including Twitch, in the coming months, the fate of the streaming platform hangs in the balance. It remains to be seen whether Twitch can overcome its current challenges and secure a sustainable future in the competitive world of livestreaming.
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