Twitch is Laying Off 35% of its Employees

Twitch announced this morning that it was laying off over 500 employees, which represent approximately 35% of the company’s workforce. The news comes just a month after the company announced that it was leaving the South Korean market to avoid “prohibitively expensive” costs.

Running a live streaming service like Twitch at a global scale is indeed incredibly expensive, and even though the company is owned by Amazon, that company laid off around 27,000 employees last year. If a previous round of layoffs in March 2023 had already affected hundreds of Twitch employees, this apparently wasn’t enough.

In a message to employees, Twitch CEO Dan Clancy explained that he made the “incredibly difficult and painful” decision to reduce the company’s headcount by one-third to ensure that Twitch could continue to operate in a more efficient manner. The CEO also said that despite last year’s job cuts, the company was still “meaningfully larger than it needs to be given the size of our business.”

“Last year we paid out over $1 billion to streamers,” Clancy said. “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 3 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.”

Earlier this week, Twitch also announced an important product update with the Enhanced Broadcasting beta in OBS. This will allow streamers to convert their videos into different resolutions on their local machine using OBS and dedicated encoders on Nvidia GeForce RTX GPUs.

As of today, Twitch offers free transcoding to all streamers, but as the company explained “transcoding can be expensive and given the number of streams Twitch supports on a daily basis we cannot always guarantee transcodes for all streamers.” In other words, this Enhanced Broadcasting Beta is great for streamers who want to have more control over transcodes, but it may also help the company cut costs related to cloud-based transcoding.