While most of the tech world has moved on from correcting the pandemic era’s overhiring, Twitch is still reeling with the problem. In a blog post today (Jan. 10), CEO Dan Clancy announced the video game streaming company is letting go a third of its staff, affecting about 500 employees. Clancy said the company is “meaningfully larger than it needs to be” after a few years of aggressive hiring over the last few years.
“For some time now the organization has been sized based upon where we optimistically expect our business to be in three or more years, not where we’re at today,” Clancy wrote. “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.”
Clancy, who took the helm of Twitch in April 2023 replacing cofounder Emmett Shear, emphasized the role of creators on the platform, saying layoffs are “necessary to ensure that we can continue to serve our streamers sustainably.” He revealed that Twitch paid more than $1 billion to creators last year, which is on par with its 2022 payouts.
Twitch makes money from advertising and selling products like subscriptions and virtual goods called Bits. It also takes a cut from streamers who are qualified to monetize their content on the platform.
Under Clancy’s leadership, Twitch has increased its payout to creators. In October 2023, Twitch launched a partner program that would allow streamers to earn up to 70 percent of their subscription revenue. Four month earlier, in June, Twitch allowed creators who were making more than $100,000 in annual revenue to split the earnings 50-50 with the company.
Clancy said in the memo he will host a live stream on Twitch tomorrow (Jan. 11) to answer additional questions about the layoffs.
Twitch sold itself to Amazon (AMZN) in 2014 for $970 million. In November 2023, Amazon closed one of its Twitch gaming initiatives, Crown Channel. The shutdown resulted in the elimination of 180 positions between that team and Amazon’s promotional unit for games, Games Growth. Amazon’s gaming division also underwent an earlier round of layoffs in April 2023.