Despite dominating the world of streaming, Twitch CEO, Dan Clancy revealed that Twitch is not profitable at this instance. Twitch came into existence in 2011 and garnered millions of users over a decade-long period. Due to its long stand in the online streaming industry, many believed that the platform was largely profitable.
Dan Clancy went on to explain that Amazon has been helpful with the funding for Twitch and helped it grow day by day. He also spoke about changing the approach to the business according to modern standards. Despite the grim fact, he promises it has been full support and additional tools over time for streamers.
A business is considered to be profitable only if the revenue received from it exceeds the expenses. It has been estimated that Twitch made over 29 million dollars in 2023, which is an adequate number for a company. However, the non-profitable nature of Twitch makes it fall under good debt. When a company falls under good debt, many take the opportunity to avoid taxes, which has been explained by Robert Kiyosaki in Rich Dad Poor Dad.
Twitch will however keep on staying in the business while being sponsored by Amazon in the long run. Still, the fact that Twitch didn’t manage to be profitable for once surprises fans globally.
Did Twitch lay off 35% of their staff because they aren’t profitable?
As mentioned before, Dan Clancy revealed that he will be changing his approach to the business to suffice in the long run. Bloomberg recently reported that Twitch recently laid off 35% of its workforce. This isn’t the first time that the platform has mass-fired employees as reports from last year suggest a deduction of 400 employees from the company.
Laying off employees remains an option for companies as it helps them mitigate expenses and return to normal terms. Twitch is currently bleeding a huge chunk of money calling for swift action. While this strategy is frowned upon by many, it is sometimes the only option left to bring back financial normalcy.
And to affirm the situation, Dan Clancy himself revealed that the layoffs happened because of Twitch’s financial struggle. Ever since COVID-19, many companies had to see changes that require them to get rid of employees to keep finances stable. Big names like Google, Amazon, Discord, and Facebook also had to lay off many employees to manage their functioning and still be profitable.