Amazon-owned Twitch slashes 35% of workforce, while Unity plans its largest layoff ever, impacting 1,800 jobs.
The video game industry is witnessing a grim start to the new year as two major players, Twitch and Unity, announce substantial layoffs, adding to the woes that plagued the sector in 2023. The aftermath of a challenging year for developers, which saw over 10,000 job losses, continues to reverberate into 2024.
The popular Unity game engine, recognizable from the loading screens of numerous games, is undergoing a significant shakeup. Unity is set to cut a staggering 25% of its workforce, amounting to 1,800 employees, marking the company’s largest layoff in its history. This move follows a tumultuous 2023, during which Unity faced backlash for attempting to charge developers for each installed copy of a game. The ensuing uproar led to a policy reversal and the departure of the president and CEO, John Riccitiello.
Unity’s reputation took a hit, resulting in immediate job cuts, and the latest round of layoffs underscores the company’s effort to align its workforce with sustainable business goals. It’s worth noting that the current reduction reveals a potentially unsustainably large workforce, given that a 25% cut equates to 7,200 employees, surpassing the staffing levels of comparable gaming companies.
Simultaneously, Twitch, the livestreaming giant owned by Amazon, is implementing a substantial workforce reduction of 35%, affecting approximately 500 jobs. Twitch has been grappling with profitability issues for nine years, and despite efforts to enhance efficiency and cut costs over the past year, the company finds its organization still larger than necessary for its business size.
CEO Dan Clancy, confirming the layoffs, emphasizes Twitch’s commitment to serving streamers and ensuring the platform’s longevity. However, challenges persist as all streaming services, including potential rivals like Elon Musk’s Twitter, face the common hurdle of generating revenue without achieving substantial profits.
Adding to Twitch’s challenges, CEO Dan Clancy announced the impending shutdown of Twitch’s operations in South Korea in February 2024. High operating costs and network fees, coupled with the resignation of key executives, contributed to this decision. Clancy described operating in South Korea as ‘prohibitively expensive,’ stating that the firm had been running at a significant loss with no viable path forward for profitability.
As these industry giants grapple with financial difficulties and strategic shifts, the ripple effects of these layoffs could reshape the landscape of the gaming and streaming sectors. The broader industry must grapple with the delicate balance between generating revenue and achieving sustainable profitability.