Twitch has been a part of Amazon since 2014. Even though Twitch is the clear top choice for streamers and their viewers, Twitch has not made money for Amazon. This pattern is ongoing, according to a recent Wall Street Journal report, which causes employees to worry about possible layoffs.
Financial concerns and layoffs
According to the report, Twitch users who are regular spenders are spending less, while the number of new users signing up is decreasing. Despite earning almost $2 billion a year, Twitch’s earnings are insufficient to compensate staff members, streamers and server costs.
Considerable layoffs have already resulted from this financial burden. Twitch cut off 500 workers at the beginning of 2023, or around 35% of its employment, after laying off over 400 workers the year before.
Amazon’s support and market competition
Twitch struggles, but with Amazon’s help, it manages to stay afloat. Amazon has historically supported Twitch in spite of its losses. Nonetheless, Twitch’s rivals’ success highlights the platform’s lack of profitability.
For example, YouTube accounted for 10% of Google’s total revenue from ads in 2023, bringing in $31.5 billion, an increase over the previous year. This indicates that, in contrast to Amazon with Twitch, Google probably makes more money from YouTube than it spends.
Uncertainty and future prospects
The future of Twitch is still unknown. The revenue sharing for streamers has changed, and the company has raised subscription fees. Further layoffs may be in the horizon; however, these steps might not be enough to improve the platform’s profitability.
Peter Kafka of Business Insider claims that Twitch lost out on the opportunity to rule the live streaming industry. Streamers are becoming less dependent on Twitch by spreading their content on other platforms such as YouTube, Kick and TikTok.