The streaming platform Twitch has just announced that it will lay off about a third of its workforce. Now the CEO admits what many have already suspected: The platform is not profitable and is supported by Amazon.
What is the situation at Twitch? At the beginning of the week, Twitch announced that it would lay off about 500 employees, which corresponds to 35% of the total workforce. In a stream on January 11, 2024, Twitch CEO Dan Clancy addressed the concerned community.
For more on the relationship between Amazon and Twitch, check out our video:
Amazon is said to be “extremely helpful” to Twitch
What did the CEO have to say? In his stream, Clancy stated what many have long suspected: Twitch is simply not economically viable and is apparently being financially supported by Amazon. “At this point, we are not profitable. Amazon has been very helpful to Twitch.”
Thus, Twitch is not alone: Steam rival Epic wanted a 50% market share – still in the red five years later
According to Clancy, Twitch wants to exist “for a very long time”: “We have a very important mission. It is crucial that Twitch is not only here today, or tomorrow, but in 50 years, in 100 years.” However, this requires sustainable operations, which means avoiding financial losses.
In recent years, however, Twitch has grown too much: “We were bigger than we needed to be, […] to meet your needs.” At the same time, Clancy emphasized that they want to provide streamers with more resources.
You can find the corresponding excerpt here in the original English version:
What is the reason? In a discussion that took place under the clip on X, formerly Twitter, reactions are widely varied. Some users do not understand how Twitch can be unprofitable, given the amount of advertising seen on the platform and racy streams allowed.
A possible reason for the lack of profitability may be that Twitch provides its services to content creators for free. Because servers for recording the countless streams that take place daily on Twitch are expensive. For this reason, VoDs were already discontinued in Korea. In February of this year, they want to completely cease operations there, which puts streamers in the position of having to leave the country.
The content creator “Wynnsanity” has also recognized this problem, even though he himself admits that his proposed solution could likely attract “the ire of the entire industry”: “I think Twitch could charge $20 a month to cover server costs.” (via X)
While it is unfortunate that this would raise the barrier to entry for new streamers, it is currently likely that especially very small streamers, with almost no viewers, are costing Twitch a lot of money without generating revenue, according to Wynnsanity.
Twitch’s cost-cutting measures had already been evident in 2023 when Dan Clancy stated at TwitchCon in Las Vegas that they could not sustain the “bidding wars” with other platforms for large content creators as a business model. This means: The days of big million-dollar deals for streamers on YouTube and Twitch are apparently over
