From Fortune:

“Amazon finds Show Biz Tough,” the ecommerce giant is cutting hundreds of employees from its streaming and movie divisions, according to an internal memo. The cuts will affect Amazon MGM Studios, Prime Video, and streaming service Twitch. This follows two rounds of layoffs last year that slashed a total of 27,000 jobs across the company.

The stream industry is difficult to scale profitably for most companies. Amazon spent billions to bolster its content library, making several pricey acquisitions including an $8.5 billion deal to acquire MGM Studios in 2022 and an 11-year, $11 billion broadcasting deal with the NFL.

Companies are rethinking streaming strategies that have focused on gaining subscribers at all costs. Amazon and peers are cutting costs, introducing ads, and licensing content that was previously exclusive to their streaming services. With borrowing costs high and consumers cutting expensive subscriptions, streaming services are looking for new sources of revenue.

Amazon signaled that the layoffs are to free up more money for content. The company spent $16.6 billion on content in 2022, behind only Netflix and Disney. Other media companies have opted to cut their content spending this year, with Disney slashing its content spending for fiscal 2024 by $2 billion.

Amazon CEO Andy Jassy had been optimistic about Prime Video, saying it was both a strong business and had a positive effect on Amazon’s core ecommerce business. Prime Video was originally launched as a marketing tool for Amazon Prime. But despite its big budgets and buzzy programming, it can be difficult to gauge the success of Amazon’s entertainment business because it does not report separate financial results for the division.



Read more: Amazon layoffs hit Prime Video, MGM studio, and Twitch