Twitch lay off 500 people as CEO concedes that staffing strategy has been "optimistic"

"Our organization is still meaningfully larger than it needs to be"

Amazon-owned Twitch have announced that they will lay off "just over 500" people - almost 35% of their workforce - in the course of on-going plans to "rightsize our company", with CEO Dan Clancy conceding that the streaming service has been operating based on "where we optimistically expect our business to be in 3 or more years, not where we're at today."

Bloomberg broke the news earlier this week, and Twitch have now confirmed the report. "I know many of you are wondering why this is happening," reads an internal email to staff from Clancy, which has now been posted on the company blog. "Over the last year, we've been working to build a more sustainable business so that Twitch will be here for the long run and throughout the year we have cut costs and made many decisions to be more efficient.

"Unfortunately, despite these efforts, it has become clear that our organization is still meaningfully larger than it needs to be given the size of our business," it continues. "Last year we paid out over $1 billion to streamers. 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."

Clancy added that the decision "is necessary to ensure that we can continue to serve our streamers sustainably without impacting their ability to support their careers on Twitch". Affected staff are now being contacted about their severance packages, with next steps varying by country. It appears that some of the layoffs are happening with immediate effect: Clancy added that "for everyone who is leaving Twitch today, I know how important it is to say goodbye to your colleagues, so you will retain access to Slack and your email until 1 PM PT (if you are in Singapore, you will have access until 12 PM local time)."

Clancy also referenced the Bloomberg story, commenting: "I also want to acknowledge how disappointed I was yesterday that this information leaked. I am sorry for all of the anxiety that it caused over the last several hours. Our hope was that you all would hear from us this morning and very quickly understand how this impacted your role and we were unfortunately not able to accelerate the timeline, which I know is very frustrating."

If you have a Twitch channel, Clancy is hosting a stream on Thursday, January 11 at 1 pm PT to discuss how the latest round of cuts will affect streamers and their audiences.

Twitch made comparably huge reductions last March, laying off 400 people, with Clancy saying at the time that "our business has been impacted by the current macroeconomic environment, and user and revenue growth has not kept pace with our expectations." More layoffs followed in October as part of a shift to outsourcing customer service. According to this week's Bloomberg report, the streaming service has yet to turn a profit since Amazon acquired it.

Last year was a terrible year for mass layoffs and this year is off to a wonderful start already, with Unity firing 1800 people on Monday. Best of luck to all affected.