Sure sounds like it’s not showtime anymore at Amazon and the dreaded, weirdly worded “executive memo to the hired help” was the first clue things were headed into sign-off territory.

…“Our industry continues to evolve quickly and it’s important that we prioritize our investments for the long-term success of our business, while relentlessly focusing on what we know matters most to our customers,” he wrote. “Throughout the past year, we’ve looked at nearly every aspect of our business with an eye towards improving our ability to deliver even more breakthrough movies, TV shows, and live sports in a personalized, easy to use entertainment experience for our global customers. As a result, we’ve identified opportunities to reduce or discontinue investments in certain areas while increasing our investment and focus on content and product initiatives that deliver the most impact.”

UH OH

Dead giveaway someone’s getting booted to the curb.

Mike Hopkins, the senior vice-president who runs Amazon’s streaming video and studios division (which now also includes MGM, added last year), sent around the Memo of Doom this morning. He’s announcing “hundreds” of upcoming layoffs in those areas, even as Prime Video gets set to soak members for an additional $3 month to turn off the ads that will shortly be padding Amazon’s bottom line in that division. Schweet now that there’s going to be less overhead, huh?

…Prime Video is home to shows like Reacher and The Boys, while MGM produces films from the James Bond and Rocky franchises, among others. Freevee, Amazon’s free ad-supported streaming service, also has original programming like Jury Duty and Primo.

It is not clear how this week’s cuts will impact those divisions, or where they are focused.

They also come just before Amazon is set to turn on ads for Prime Video, requiring users to pay an extra $3 per month to avoid them. The move is estimated to instantly deliver billions of dollars in incremental revenue to the division.

Can someone translate the Senior VP speak for me?

…“Our prioritization of initiatives that we know will move the needle, along with our continued investments in programming, marketing and product, positions our business for an even stronger future,” Hopkins added.

That same Mike Hopkins also had his rah-rah going for the MGM deal when it went down two years ago.

…said Mike Hopkins, Senior Vice President of Prime Video and Amazon Studios. “The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team. It’s very exciting and provides so many opportunities for high-quality storytelling.”

I wonder how the “treasure trove” angle playing out now? Because, I mean, Amazon paid a freakin’ pretty penny for MGM. It takes a buttload of business and subscribers to recoup an investment like that.

…Nearly a year after acquiring MGM for $8.5 billion in 2022, Amazon launched Amazon MGM Studios Distribution to license Amazon Originals and other titles to streaming services and cable companies in an effort to earn more revenue.

Hopkins’ division has also never turned a profit and stumbled with some major big budget bombs.

…Prime Video is home to the likes of Reacher and The Marvelous Mrs. Maisel, while MGM owns franchises such as James Bond and Rocky. Together, the two divisions hold the rights to big content names, yet this still hasn’t been enough to turn a profit.

The reason? In part, expensive productions. Take The Lord of the Rings: The Rings of Power. Season 1 touts the title of being the most expensive season of television ever created, with a $465 million budget. However, its viewership didn’t live up to the hype or justify the price tag.

Prime Video is considered a loss leader for Amazon – often thought of as an add-on service to Amazon Prime. However, this is one loss the company is clearly able to swallow, since in the summer quarter of 2023 alone Amazon turned a profit of nearly $10 billion.

Still, a business that just exists under the arm of its wealthy parent company is never a favorable option, so where does that leave the future of Prime Video and MGM?

That’s a great question, when true movie and content powerhouses like Disney, Warner Bros/Discovery, and Netflix have stumbled badly this past year, and are, themselves cutting way back on production budgets. It’s that much harder for Amazon. They’ve never had that built-in brand loyalty of generations, like a big studio name, or the years of crafting fine small-box films, like Netflix is truly capable of. They have to build an audience.

On the San Francisco based livestreaming gaming side of the house, the numbers are already set at over 500 jobs gone. At least Twitch CEO Dan Clancy came right out and said, “This sucks and I’m sorry,” instead of some politician-level argle-bargle about being better in years, etc. The betting money is that they thought pandemic cocooning would last longer than it did, and not everyone is staying home gaming.

Twitch is laying off more than 500 employees, Twitch CEO Dan Clancy announced this morning, reportedly accounting for around 35 percent of its staff. Bloomberg first reported that the video game streaming platform was planning layoffs on Tuesday, and the company confirmed today that the cuts were happening.

“I regret having to share that we are taking the painful step to reduce our headcount by just over 500 people across Twitch,” Clancy wrote. “This will be a very hard day.”

This after already cutting 400 jobs last March, and these latest cuts amount to about 35% of Twitch’s staff. Additionally, the company is ready to shut down their operation in South Korea, saying the network fees there are “prohibitively expensive.”

They’ll roll up the SoKo carpets permanently on February 27.

Retrenchment is a thing.