Twitch “isn’t profitable” admits CEO, in wake of recent layoffs

Twitch CEO Dan Clancy has admitted the Amazon-owned streaming platform isn’t profitable.

Clancy led a Q&A stream on Twitch following the news earlier this week the company is laying off over 500 members of staff, equating to around 35 percent of its workforce.

“We’ve implied this before where we say we need to run it sustainably,” said Clancy, “but I’ll be blunt: we aren’t profitable at this point.”

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He continued: “Amazon has been extremely supportive of Twitch and a big thing for being sustainable over time is ensuring that we don’t lose money.”

In his internal email to staff detailing the layoffs, Clancy stated the organisation is “still meaningfully larger than it needs to be given the size of our business.”

He reiterated this on his stream. “We need to make sure Twitch is the right size so that we can be here for a very long time,” he said. “It’s critical that Twitch is here not just today, not just tomorrow, but 50 years from now, 100 years from now. Our job is to run Twitch in a manner that can ensure its prosperity, it’s thriving, and it’s here for you and your communities that you’ve built, because I don’t think the other platforms are actually like Twitch at all.”

He continued: “The bottom line is, 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.”

The industry as a whole has been hit by layoffs over the past year, something Clancy alluded to in his opening remarks. “This is not unique to Twitch, in fact it’s quite common for tech companies to size their organisation thinking about where they might be in three or four years,” he said. “And of course we have big dreams at Twitch in terms of where we’re going to be and how we’re going to be able to continue to grow with live streaming. However, we really need to run the company based on where we’re at today.”

On top of these latest layoffs, Twitch will end operations in South Korea at the end of next month due to the high cost of operations.

“I want to be clear that we still have more than enough resources,” said Clancy. “We are still a reasonably sized organisation. We’re still going to be able to service your needs. We’re still going to be able to improve the product. We won’t be able to do as much as we would’ve done before but I think we’re still going to see a lot happening in ’24 that you’ll be very excited about.”

It remains, however, a worrying time for Twitch and its streaming community. The platform has struggled to monetise over the years: at the start of last year it announced it would introduce new ways for streamers to make money and updated its ads incentive programme, but recent news suggests this has not proven profitable.

And while many streamers still campaign for a better revenue split, its seems unlikely this will change any time soon.

More recently, Twitch has struggled to contain the increase in sexualised content on the platform – something it needs to curtail for advertising purposes but those streamers likely bring in decent revenue through high subscription numbers.

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