Amazon is laying off hundreds of employees across its Prime Video and entertainment studio divisions in a move to cut costs and shift strategy amid increasing economic pressures. The layoffs come even as the company reported record profits in 2022.
Over 500 Jobs Cut at Prime Video Business Units
The e-commerce and cloud giant moved to eliminate jobs at Prime Video and its MGM and Amazon Studios units this week, with over 500 positions expected to be impacted in total.
According to an internal memo from Prime Video vice president Mike Hopkins that was obtained by media outlets, the company made the “difficult decision” after a review of the organization. Hopkins wrote that Amazon Prime Video will now “closely align” the organization to support a “new phase” of growth and evolution of the streaming business.
In a similar internal letter at Amazon Studios, head Jennifer Salke cited a challenging economy and noted the organization had grown very quickly over the past several years. Salke said Amazon Studios leadership “will make changes to align with our strategic priorities and to position us for future success.”
While exact numbers have not been disclosed, hundreds of jobs are expected to be eliminated across the two entertainment divisions. The cuts amount to over 10% of Prime Video and studio staff. Areas impacted include marketing, technology, creative executives and others. The layoffs add to previous cuts last year across devices, books, and HR.
Key details about the Prime Video and studios layoffs:
- Over 500 jobs cut across the segments
- 10%+ of staff impacted in the divisions
- Areas include marketing, tech, creative roles
- Part of shift in Amazon’s entertainment strategy
The reductions come even after Amazon [reported record profits](https://www.cnbc.com/2023/02/02/aws- earnings-q4-2022.html) of $30 billion in 2022 on sales of over $500 billion. However, the company’s stock struggled last year amid a tech downturn.
Twitch Streaming Unit Also Sees Major Cuts
In a related move, Amazon’s live-streaming platform Twitch also undergone significant layoffs this week.
Twitch CEO Dan Clancy announced in an internal letter that the company is cutting approximately 35% of its workforce. This includes eliminating over 500 positions from the Twitch team globally.
Areas impacted include Twitch’s sales, marketing, partnerships, and other supporting services. The core live streaming operations remain intact.
Clancy stated that Twitch has tried to grow too quickly and that the leadership team took a “hard look” at the business in deciding on the job cuts. Reports indicate Twitch has still struggled with profitability, nine years after being acquired by Amazon for $970 million.
Shift to More Targeted Entertainment Strategy
The sweeping job cuts across Prime Video and Amazon’s studios signal a strategic shift in the company’s massive investments in original entertainment.
Amazon is moving to narrow its focus on the most successful franchises and properties within its video streaming and studios segment. This includes established brands like The Lord of The Rings, which is being developed into a mega-budget series.
The company will divert resources away from more marginal projects to double down on proven winners. Prime Video is also focusing on adding advertising to bolster revenues from its content.
The streamer has committed over $1 billion alone just for the first season of the new The Lord of The Rings show. However, expensive overwhelm critical hits like The Wheel of Time and The Peripheral were cancelled after just one season.
Prime Video Strategic Shift Key Points
- Focus on established franchises and proven IP
- Scale back spending on more niche projects
- Build out an ad-supported tier to increase monetization
- Eliminate roles not core to new strategy
This renewed focus on tentpole franchises mirrors similar moves by other streamers. For example, Disney has concentrated its streaming efforts around Star Wars and Marvel properties.
Analysts indicate that Amazon’s previous broad “something for everyone” entertainment approach was likely overextended and needed reining in. The job cuts help reallocate resources to content areas that drive higher engagement and returns.
What Comes Next After the Layoffs
The large-scale job cuts pose an uncertain future for many Amazon employees now searching for new opportunities. However, the company has a track record of providing transitional benefits, job placement assistance, and severance pay.
For Amazon’s entertainment units, the near-term focus will be on quickly aligning to the new targeted video strategy dictated from leadership. This means eliminating redundancies and non-essential areas to streamline operations.
It remains to be seen whether the refreshed approach pays dividends in making Prime Video more competitive in the crowded streaming landscape. The service trails leaders like Netflix and Disney+ in paid subscribers.
Now nine years after it first jumped into the streaming video wars, Amazon is betting that a back-to-basics approach centered on its most popular IP can help close that gap. But with economic storm clouds on the horizon, the road ahead still looks challenging.
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