Twitch CEO claims the platform is not profitable after the latest round of layoffs

The start of 2024 is not going well for the video game industry, which continues to be in a maelstrom of layoffs. Streaming platform Twitch was recently hit by a round of mass layoffs that affected about 500 employees, or about a third of the company, according to Bloomberg estimates. A few days later, Twitch CEO Dan Clancy publicly commented on the situation. For the executive, it is a simple matter: “We are not profitable at this point.”

According to its CEO, Twitch is not profitable, leading to the layoff of a third of its staff.

On Thursday, January 11, Dan Clancy went live on Twitch’s Twitch account to shed some light on the layoffs of a third of the company’s staff earlier this year. He was blunt: “We aren’t profitable at this point. Amazon has been very supportive of Twitch, and a big part of being sustainable over time is ensuring that we don’t lose money.”

Clancy also blames the layoffs on the platform being “bigger than we needed it to be,” referring to the boom in numbers during the global COVID-19 pandemic. With movement restrictions and home confinement, many more people than usual started watching Twitch, leading to a huge growth of the live streaming site. However, those numbers began to decline as the lockdown ended in many countries.

“In terms of making the decision, we were bigger than we needed to be in terms of the size we needed to be to service your needs,” and “It’s critical that Twitch is here not just today, not just tomorrow, but 50 years from now, 100 years from now,” the company executive said. Regarding the latter statement, Clancy compared Twitch’s situation to that of large technology companies, citing that “this is not unique to Twitch, in fact it’s quite common for tech companies to size their organization thinking about where they might be in three or four years,” referring to this “overgrowth,” he commented.

Twitch was founded in 2011 and is owned by Amazon, Jeff Bezos’ company. The purchase was made in 2014 for one billion dollars. Twitch is a live broadcasting platform mainly focused on video games, although in principle it can broadcast other content such as talks or music, as long as it complies with standards of decency. Nevertheless, the site has not been free of controversy regarding the content shown by some of its users, such as semi-nudity or gambling content.

The platform’s biggest content creators have turned their broadcasts into a way of life. Twitch allows them to make money from user subscriptions and donations of Bits, the platform’s virtual currency. A large number of content creators being paid different amounts month after month could also be one of the reasons why the site’s balance sheet is negative.