Live video streaming is a popular but resource-intensive industry, and Amazon-owned Twitch is feeling the pinch. The company recently announced that it will be laying off over 500 employees, which amounts to 35% of its staff. Amazon, which owns Twitch, is also planning to cut several hundred roles at its Prime Video and MGM Studios division. These layoffs are a result of the company's efforts to keep its business sustainable.

Twitch CEO, Dan Clancy, explained in a blog post that despite the company's previous efforts to cut costs, it has become clear that their organization is still too large. Clancy revealed that Twitch paid its streamers over $1 billion last year, which is more than the amount Amazon paid to acquire Twitch in 2014. The company has been sized based on its optimistic expectations for future growth, rather than its current size.

The layoffs have caused concern among Twitch users that the company may resort to placing more ads and allowing controversial content to increase revenue. Last month, Twitch relaxed its rules on sexual content, but it was forced to backtrack after some users exploited the changes to post nudity.

Amazon is also making its own job cuts as part of its efforts to prioritize long-term success. The company has identified opportunities to reduce or discontinue investments in certain areas while increasing its focus on content and product initiatives that deliver the most impact. Amazon cut 18,000 jobs last year following a pandemic-era hiring spree.

The layoffs come just as Amazon plans to start showing ads on Prime Video, beginning on January 29th. Subscribers who wish to remove the ads will need to pay an additional $2.99 a month.

Overall, the layoffs at Twitch and Amazon's Prime Video and MGM Studios division are a sign that the companies are taking steps to ensure their long-term success. However, it remains to be seen how these job cuts will affect the user experience and revenue streams of these popular streaming services.