Amazon.com Inc. is cutting hundreds of jobs at its Prime Video and MGM Studios units, re-evaluating spending priorities for its long-term success. Additionally, staff reductions are announced at its Twitch live-streaming video service on Wednesday as part of a cost-cutting initiative.
Starting January 29, Prime Video members who want to keep their movies and televisions ad-free must pay an additional $2.99 per month, or they will start seeing ads on movies and television shows, as announced in September.
Amazon's Strategic Shift
Mike Hopkins, the Senior Vice President of Prime Video and Amazon MGM Studios, announced the company's strategic shift, where the company is increasing investment in impactful areas to prioritize the business's long-term success.
In the memo, a thorough review has identified opportunities for improvement in delivering breakthrough movies, TV shows, and live sports to global customers over the past year. As a result, the company will cut hundreds of roles across the Prime Video and Amazon MGM Studios organization to focus on increasing investments in content and product initiatives that promise the most impact. Hopkins added that focusing on initiatives that will make a significant impact, coupled with ongoing investments in programming, marketing, and product, positions the business for a stronger future.
Prime Video and MGM's Workforce Reduction
Following the pandemic's hiring increase, Amazon has been reducing its workforce, including the layoff of 9,000 employees in March and the 18,000 layoffs in January 2023, which granted the departing employees a separation payment and job placement support.
Amazon announced in May that it would share its original film, "The Marvelous Mrs. Maisel," with media outlets beyond its Prime Video service for the first time, which would be licensed through Amazon MGM Studios Distribution. This new Hollywood studio boasts over 4,000 film titles and 17,000 TV episodes, acquired by the e-commerce giant in 2022 for $8.5 billion.
Amazon has been among the big tech firms reducing its workforce following a year of ad declines. The company implemented its most extensive layoffs, eliminating over 27,000 jobs across nearly every department since 2022.
Twitch's Workforce Reduction
The layoffs come the same day Amazon's Twitch livestreaming unit revealed plans to reduce its workforce by 500 employees.
Twitch, the video game streaming platform acquired by Amazon nearly a decade ago for around $1 billion, is cutting over 500 jobs to make the costly division profitable.
In an email to employees, Twitch CEO Dan Clancy mentioned that despite cost-cutting measures and improved efficiency, the platform is still larger than necessary for the size of its business. "For some time now the organization has been sized based upon where we optimistically expect our business to be in 3 or more years, not where we're at today," Clancy wrote.
Twitch is a multi-channel online network designed for a generation that grew up with video games and enjoys watching top gamers, similar to how many people follow professional sports, which Amazon bought for $970 million to tap into the growing trend of online gaming as a spectator sport in 2014.
Twitch, headquartered in San Francisco, withdrew from the South Korean market last month, citing high network fees. According to Clancy, the network fees paid to South Korean internet operators were ten times higher than in most other markets, although specific numbers were not disclosed.
