Twitch is not Profitable for Amazon
According to the recent report, Twitch has a problem to turn a profit. This is seemingly a continuation of a trend since Amazon acquired Twitch back in 2014.
Profit Problem for Twitch
Twitch is one of the leading streaming sites on the web, primarily facing significant competition from the likes of Kick and YouTube. While Twitch remains quite popular, and many streamers are making a living or becoming downright rich from streaming on the platform, that doesn’t necessarily mean success for the parent company.
According to a new report from the Wall Street Journal, via Dexerto, Twitch is having financial problems that are making its employees nervous. The report indicates that those who are frequent spenders on the platform are spending less, and the rate at which new users are signing up is slowing down. Although Twitch reportedly earns about $2 billion in revenue annually, it’s seemingly not enough to equal a profit after the service is done paying employees, streamers, and spending money towards hosting and server costs.
This news is apparently not going over well with employees, who fear that Twitch may lay off more workers. Twitch started the year laying off 500 employees, or roughly 35% of its workforce at the time. This round of layoffs followed over 400 people being laid off in 2023. It’s understandable that employees are concerned, given the company’s history.
While the CEO has admitted that Twitch isn’t profitable at this time, it survives thanks to Amazon’s support. It’s worth noting that Amazon itself is a hugely successful mega corporation that rakes in profit every year. While it would probably prefer to not lose a significant amount of money to Twitch, it’s unlikely for the streaming service to truly hamper its parent company.
However, this inability to turn a profit is further underscored by some Twitch competitors’ recent performance. YouTube made up 10% of all advertising revenue for Google in 2023, raking in a staggering $31.5 billion, an increase of nearly $2 billion since the year before it. While the costs of running YouTube certainly eat a portion of that revenue, it’s hard to imagine Google isn’t making more money than it’s spending.
For now, it’s not clear how Twitch will proceed. Recently the company increased the cost of Twitch subscriptions and made some contested changes to how much of a cut streamers take home in recent times so we can’t say anything sure for the future of platform.
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