Amazon-owned Twitch is firing more than 500 of its workers amid concerns over rising costs it is facing in running the business, the streamer announced on Wednesday.
Twitch CEO Dan Clancy made the announcement in a blog published on the company website, citing sustainability related reasons behind the "rightsizing" of the firm, which, he said, was still "meaningfully large” given the size of the business.
"Today I have some incredibly difficult news to share. As you all know, we have worked hard over the last year to run our business as sustainably as possible. Unfortunately, we still have work to do to rightsize our company and I regret having to share that we are taking the painful step to reduce our headcount by just over 500 people across Twitch," Clancy said in the blog.
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One of the reasons cited behind the culling is enormous costs of running the streaming service which supports 1.8 billion hours of live video content a month. Despite the company using Amazon servers, the load is still too much to support.
The decision came on the day Amazon, Twitch parent firm, announced it would be sacking "hundreds" of employees from its Prime Video and MGM Studios divisions.
According to CNBC, the move was made with a design to focus on creating more impactful streaming content.
"Throughout the past year, we’ve looked at nearly every aspect of our business with an eye towards improving our ability to deliver even more breakthrough movies, TV shows, and live sports in a personalized, easy to use entertainment experience for our global customers," Mike Hopkins, who heads the two units, wrote in a memo sent to employees on Wednesday, as quoted by CNBC.
He added, "As a result, we’ve identified opportunities to reduce or discontinue investments in certain areas while increasing our investment and focus on content and product initiatives that deliver the most impact. As a result of these decisions, we will be eliminating several hundred roles across the Prime Video and Amazon MGM Studios organization."
The Twitch culling comes against the backdrop of the gaming streamer deciding to shut down its operations in South Korea over prohibitive costs of running the business in the country.
The company had in December last year announced it was winding up its operations in South Korea over 10 times higher network fees it was paying to operate there.
"While we have lowered costs from these efforts, our network fees in Korea are still 10 times more expensive than in most other countries. Twitch has been operating in Korea at a significant loss, and unfortunately there is no pathway forward for our business to run more sustainably in that country," Clancy had then said.
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