Platform could become “zombie brand”.
Image credit: Twitch
Twitch staff are concerned a third round of layoffs could hit the streaming platform, following 500 job cuts earlier this year and 400 in 2023.
That’s according to a new report from The Wall Street Journal, which states Amazon paid almost $1bn for Twitch but it’s now making less money and engagement has slowed.
The company is set to have an annual operational review this autumn and staff are concerned more job losses could follow. Amazon chief executive Andy Jassy has led a profitability review at Twitch and shown little tolerance for unprofitable business, the Journal reports.
Sources at Twitch are concerned the platform could become a “zombie brand” at Amazon. These are projects or acquisitions that are sidelined for not living up to expectations – Goodreads and Woot are two examples.
A spokeswoman for Amazon told the Journal it has always taken a long-term view of Twitch and noted its ability to attract harder-to-reach audiences. The company said it remains confident in Twitch’s potential.
At the start of the year, Twitch CEO Dan Clancy admitted the company isn’t profitable, shortly after layoffs were announced.
Amazon doesn’t publicly reveal revenue figures for Twitch, but internal documents reviewed by the Journal suggest it generated about $667m in ad revenue and $1.3bn in commerce revenue in 2023. This accounts for less than 0.5 percent of Amazon’s total revenue for the year.
The Journal reports spending on subscriptions is down and, if internal projections are correct, Twitch could shed almost a quarter of a billion dollars in revenue by the end of 2025. Further, Twitch’s advertising sales have plateaued since its boom during the pandemic.
According to network analytics and security firm Noka Deepfield, Twitch has dropped from the fourth largest source of US web traffic in 2014 when bought by Amazon to the 18th.
“We definitely are intending to be around for many years,” VP of product Jeremy Forrester told Eurogamer at this year’s TwitchCon EU event. “Obviously the biggest action that we took was the layoffs… to try and put Twitch in a position to be sustainable for the long run. We want to be in a position where we can continue supporting creators for the longest time.”
“I personally feel very confident about where we are right now,” he continued. “We’re structured in a way in which we have a good line of sight for the next few years of where we want to go and where we want to be.”
A major part of Twitch’s strategy is improving its mobile experience. At TwitchCon EU it announced its new mobile app would be released this summer – that’s now available for all users.
“Today, most of the hours watched on Twitch come from our desktop experience. But in any given month, over 50 percent of users primarily use Twitch on their phone, with 40 percent exclusively using their phone,” reveals a blog post about the new app. “Most of our desktop users also check in regularly from the app. This is even more pronounced with new viewers – almost three quarters start watching Twitch for the first time on mobile.”
