Amazon plans layoffs at Twitch, Prime Video.

Internal memo cites identification of cutbacks in investments amid layoffs.

Amazon plans to lay off several hundred employees in its streaming and studio operations, as revealed in an internal note sent on Wednesday. This announcement coincided with Twitch, an Amazon subsidiary, disclosing its own plan to lay off approximately 35% of its workforce, totaling 500 employees.

In the preceding year, Amazon participated in a broader trend of US tech layoffs, cutting over 27,000 jobs and marking the conclusion of the industry’s expansive recruitment phase during the pandemic. Other major players like Facebook and Microsoft each laid off 10,000 workers, while Google reduced its workforce by 12,000.

Mike Hopkins, Senior Vice President of Prime Video and Amazon MGM Studios, informed employees, “We’ve identified opportunities to reduce or discontinue investments in certain areas while increasing our investment and focus on content and product initiatives that deliver the most impact.

In a blog post, Twitch’s CEO, Dan Clancy, acknowledged that the company had expanded too rapidly, driven by the optimism that its business would grow at a faster pace.

“We still have work to do to rightsize our company,” wrote Clancy. “For some time now, the organization has been sized based upon where we optimistically expect our business to be in three or more years, not where we’re at today.”

Amazon has been on an aggressive spending spree in recent years to strengthen its media business, including an $8.5 billion deal for MGM and an investment of approximately $465 million in the first season of “The Lord of the Rings: The Rings of Power” on Prime Video in 2022. Additionally, Amazon plans to introduce ads on Prime Video and a more expensive ad-free subscription tier in certain markets, aligning with strategies adopted by competitors like Netflix and Disney.