In a bid to make its tremendously expensive division profitable, Twitch, the popular video game streaming platform owned by Amazon, has announced that it will be laying off over 500 employees. Twitch CEO, Dan Clancy, addressed the employees in an email, stating that despite cost cuts and increased efficiency, the platform is still larger than necessary for its current business size.

The acquisition of Twitch Interactive by Amazon in 2014 for a staggering $970 million was seen as a strategic move by the e-commerce giant to tap into the growing popularity of video gaming as an online spectator sport. Twitch, a multi-channel online network, caters to a generation of individuals who have been raised with video games and have a keen interest in watching some of the best gamers in the world, much like how people watch professional sports.

However, Twitch has faced several challenges in recent times. Just last month, the platform announced its withdrawal from the South Korean market, citing exorbitant network fees as the reason. Clancy revealed that the network fees paid to South Korean internet operators were ten times higher than those in most other markets, although he did not provide specific figures to support this claim.

Clancy expressed regret in his email to the employees, acknowledging that the company still has work to do in rightsizing its operations. This decision to reduce the headcount by over 500 people across Twitch is a painful step towards achieving that goal.

This news comes in the wake of Amazon's ongoing efforts to streamline its operations and cut costs. The tech giant has already laid off thousands of employees after a hiring surge during the pandemic. In March, Amazon announced its plans to lay off 9,000 employees, adding to the 18,000 job cuts announced in January 2023. This week, the company is also cutting several hundred positions across its Prime Video and MGM Studios unit.

Mike Hopkins, the senior vice president of Prime Video and Amazon MGM Studios, explained in a note to employees that the company is redirecting its investments towards areas that have the most impact while stepping back from others. This move reflects Amazon's strategy to prioritize profitability and efficiency across its various divisions.

As Twitch faces the challenge of becoming profitable, it remains to be seen how these layoffs will impact the platform's operations and its ability to cater to its large user base. The future of Twitch, once a pioneering force in the world of video game streaming, now hangs in the balance as it navigates the complex landscape of online entertainment.