Twitch Layoffs – Paying Too Much For Talent and, Apparently, 50% of Everything Earned isn’t Profitable

By Todd Russell Jan28,2024

As dismaying as it is talking about more workers being laid off in the gaming space — there was too much of that in 2023 — here we are at the start of 2024 and it’s happening with game streaming (Twitch) and game chat (Discord), too.

The former, run by Amazon, yes that Amazon that decided they needed to start running ads on Prime Video and charge customers $2.99/month to be ad-free, has hired too many people to work behind the closed doors of Twitch, also.

Why is it that so many tech companies hire too many people? Sure, the market is down, but it always seems to be the labor closest to the customer, closest to the field gets cut hardest and first. As I write this, I have no idea if that’s true in the case of Twitch, just throwing that out there.

We do know, however, that the CEO of Twitch has declared Twitch is currently “unprofitable”:

“The bottom line is, we were bigger than we needed to be, in terms of the size we needed to be to service your needs.”

Twitch CEO Dan Clancy says platform isn’t “profitable” days after widespread layoffs – Dexerto

Just a reminder, but Twitch takes 50% from most twitch streamers. That’s a huge chunk of the pie not to be able to run profitably.

Upon further research, the problem is also the large contracts Twitch offered to retain popular Twitch streamers. They aren’t going to do that any more either, says the Twitch CEO:

“I can tell you the cost of retaining those streamers would have been far more than the revenue generated,” he said. “That is something we’ve been very clear about, we don’t want to do that.”

Twitch CEO explains why they’re done offering massive contracts to streamers – Dexerto

I try to skip past various articles about random popular Twitch streamers, often thinking: who cares? Apparently, some/most (?) these people aren’t driving advertising revenue commiserate with their popularity.

UPDATE 1/28/2024 @ 5:06am PST: There have been so many different game-related layoffs. Microsoft laid off 1,900 workers recently as well: Microsoft lays off 1,900 Activision Blizzard and Xbox employees – The Verge

This is a trend we hope at PGM does not continue in 2024.

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