Streaming platform Twitch is not making profit, accepts CEO Dan Clancy

Popular streaming platform Twitch CEO Dan Clancy has announced over 500 layoffs, constituting about 35% of the company's workforce. Clancy addressed the challenges faced by Twitch, emphasising the need to rightsize the company in response to its current business scale and future growth predictions.

This move follows a prior round of layoffs in the previous year, where 400 employees were cut from the company. Clancy outlined the situation in a blog post, acknowledging that despite Twitch's robust business performance, the organisation had been sized optimistically for future expectations rather than its current reality.

"While the Twitch business remains strong, for some time now the organisation has been sized based upon where we optimistically expect our business to be in three or more years, not where we're at today," explained Clancy. He highlighted that Twitch had paid over $1 billion to streamers in 2023, but the company is currently out of stock.

During a live stream, Clancy candidly admitted that Twitch is not making a profit at this point and revealed that Amazon, its parent company, has been providing significant support. 

"Amazon has been extremely supportive of Twitch. A big part of my job is ensuring we don't lose money, as that's crucial for our long-term sustainability," he stated.
Twitch faces tough competition from rivals like Kick, which has successfully attracted popular streamers with lucrative contracts. 

Notably, xQC, also known as Félix Lengyel, signed a substantial multi-year deal with Kick last year, reportedly worth around $100 million. Clancy, however, asserted that Twitch is not interested in offering such deals to streamers, deeming them economically unviable.

"The cost of retaining those streamers would have been far more than the revenue generated from them," explained Clancy. "We don't want to do that."

Despite the challenges, Clancy reassured the Twitch community that there is no imminent danger of Amazon shutting down the platform. 

"Amazon is very bullish on Twitch. They've been investing heavily in Twitch," he affirmed, dispelling concerns about the platform's future.

As Twitch undergoes these organisational changes, additional reports suggest that the streaming giant is also exploring options to shrink its expensive San Francisco headquarters. The move is indicative of the broader adjustments the company is making to streamline operations and adapt to the current landscape of the streaming industry.