After Laying Off Over 500 People, Twitch Boss Admits the Business Is Not Profitable

Twitch boss Dan Clancy has answered questions on the state of the company after announcing plans to cut over 500 members of staff. Earlier this week, Twitch confirmed plans to cut about 35% of staff on top of 400 layoffs last year. In a blog post, CEO Clancy said “we still have work to do to rightsize our company”. Clancy said despite cost-cutting throughout 2023, Twitch “is still meaningfully larger than it needs to be given the size of our business.” In 2023, Twitch paid out over $1 billion to streamers, Clancy confirmed. “So while the Twitch business remains strong, 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. “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.” Speaking in a follow-up livestream, Clancy said Twitch parent company Amazon had propped up the broadcaster as it remains unprofitable. “I’ll be blunt: we aren’t profitable at this point,” Clancy said. “Amazon has been extremely supportive of Twitch. Big thing for being sustainable over time is ensuring we don’t lose money. That’s a big part of my job because that’s going to be what makes sure we can be here for the long term.”

Amazon has been extremely supportive of Twitch.

Twitch has suffered pressure from rivals such as Kick, which has snapped up popular streamers in huge deals. Last year, Twitch streamer xQC, aka Félix Lengyel, signed a massive multi-year deal with Kick reportedly worth around $100 million. Clancy said Twitch was no longer in the business of offering big-money deals to streamers, insisting the economics do not make sense. “The cost of retaining those streamers would have been far more than the revenue generated from them,” he said. “That is something we’ve been very clear about. We don’t want to do that.” Elsewhere in the livestream, Clancy insisted there is no risk that Twitch will get the axe from Amazon, despite the company’s lack of profitability. “The answer is emphatically no,” Clancy replied to a question from chat. “Not at all. Amazon is very bullish on Twitch. They’ve been investing heavily in Twitch.” The fallout of Twitch’s mass layoffs continues, with the San Francisco Chronicle reporting this week that Twitch is seeking to downsize its costly San Fran headquarters. After a brutal year for layoffs, 2024 has started in similar fashion, with thousands of jobs cut across the tech and entertainment industries. Most recently, Discord confirmed plans to let go 17% of its staff, a move that affects 170 people across the business. Unity was also recently hit with sizeable cuts, which affected around 25% of its workforce.