Twitch, the popular streaming platform acquired by Amazon in 2014, has been facing significant financial challenges in recent years. Despite Amazon paying $1 billion for the company, Twitch has struggled to turn a profit. The Wall Street Journal reported that Twitch generated only about 0.5% of Amazon’s total revenue in 2023, with approximately $667 million in ad revenue and $1.3 billion in commerce revenue. The high infrastructural costs of supporting a large volume of livestreams, along with the difficulty of integrating advertising into long-form live video, have contributed to Twitch’s financial struggles.
In response to its financial difficulties, Twitch has been forced to lay off nearly 1,000 employees within the last 12 months. This includes 400 workers in 2023 and another 500 earlier this year. Twitch CEO Dan Clancy stated that the company was “meaningfully larger than it needs to be”, indicating that additional layoffs may be on the horizon. Employees are concerned that further job cuts may be announced after Amazon’s second-quarter results are reported, and an internal operations review is due at Twitch later this year.
Employees fear that Twitch may be on the path to becoming a “zombie brand” within Amazon. The term refers to a company that fails to meet financial expectations and becomes marginalized within its parent company. Previous examples of zombie brands at Amazon include Goodreads and Woot. Twitch employees have criticized Clancy for engaging in international work trips to meet with creators and host livestreams while simultaneously laying off employees and acknowledging the platform’s unprofitability.
Internal projections suggest that Twitch’s revenue from subscriptions and donations to creators may decrease by $250 million by the end of next year. This decline in revenue from its audience further complicates Twitch’s financial outlook. The platform’s inability to capitalize on the surge in demand during the Covid-19 pandemic has raised concerns about its long-term viability.
As Twitch navigates these financial challenges, the future of the platform remains uncertain. With ongoing struggles to turn a profit, Twitch must reevaluate its business model and find new ways to generate revenue. The looming possibility of additional layoffs and the risk of being sidelined within Amazon has cast a shadow over Twitch’s prospects. The platform must address these issues proactively to avoid the fate of becoming a zombie brand within the Amazon ecosystem.
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