The streaming platform Twitch announced this Wednesday that it was parting ways with 35% of its workforce. The company is experiencing one of its worst moments and is being forced to carry out a third round of layoffs, which will affect a total of 500 workers, as announced in a memo by the company's CEO, Dan Clancy:
I wanted to send a short note to let you know that we’ve made the difficult decision to reduce the size of our workforce today. At this point in time, we are focused on communicating with our employees and providing them with clarity on how this impacts each of them. We greatly value the employees we’re saying goodbye to today as people and professionals and are grateful for all their efforts to support all of you.
As reported by Deadline, the measure is part of a cutback plan that other companies within Amazon such as Prime Video and Amazon Studios are carrying out. Bloomberg managed to get the scoop on this news but Clancy claimed that it had been "leaked" and that it came out before they could notify the people affected of the dismissal.
The cutback plan that explains the layoffs at Twitch
As explained by the CEO of Twitch, the decision to get rid of more than a third of the workforce is carried out as part of a cost reduction plan. Dan Clancy assured that the economic forecasts for this year were bad and that, although the business "remains solid" they had not yet managed to make profitable the 970 million dollars that Amazon paid for the company in 2014:
Over the last year, we’ve been working to build a more sustainable business so that Twitch will be here for the long run and throughout the year we have cut costs and made many decisions to be more efficient. Unfortunately, despite these efforts, it has become clear that our organization is still meaningfully larger than it needs to be given the size of our business.
Last year we paid out over $1 billion to streamers. So while the Twitch business remains strong, for some time now the organization has been sized based upon where we optimistically expect our business to be in 3 or more years, not where we’re at today. As with many other companies in the tech space, we are now sizing our organization based upon the current scale of our business and conservative predictions of how we expect to grow in the future.
