Amazon will lay off several hundred employees in its streaming and studio divisions as well as subsidiary Twitch in order to reduce costs amid the latest in a wave of video industry contraction.

Twitch, the video live-streaming company acquired by Amazon in 2014 will cut just over 500 roles, or 35% of its workforce, according to a blog post by Twitch CEO Dan Clancy. Prime Video and MGM Studios will eliminate “hundreds” of jobs, according to an email sent by management to employees on Wednesday morning.

“Despite these efforts, it has become clear that our organization is still meaningfully larger than it needs to be given the size of our business,” Clancy said. “[The] decision, while incredibly difficult and painful, is necessary to ensure that we can continue to serve our streamers sustainably without impacting their ability to support their careers on Twitch.”

Added Mike Hopkins, senior VP of Prime Video and Amazon MGM Studio, in his separate company email address: “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 ... 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.”

Amazon said that the layoffs will be completed by the end of the week.

The cuts come just weeks before Amazon is set to roll out a new ads initiative for subscription-based Amazon Prime Video service, requiring users to pay an extra $3 per month to avoid them. 

These ads could boost annual revenue by as much as $5 billion, according to a Bank of America Analysis. Ads on Amazon’s streaming service will start appearing in North America on Jan. 29 and internationally on Feb. 5.

Amazon has spent recent years aggressively pursuing the growth of its media division, including the $8.45 billion acquisition for MGM in 2021 and over $1 billion in payouts to individual content creators by subsidiary Twitch last year. Later, it was revealed that Amazon had grossly overvalued MGM's content library, which was re-assessing it at $3.4 billion, according to a March 2022 10Q filing.

Amazon has ramped up its streaming offerings as part of its Prime package in recent years, which charges for expedited shipping and other perks.

But last year, Twitch also laid off 400 people as part of overall Amazon cuts. And in December, announced it would shut down its service in South Korea because of “prohibitively expensive” costs.

Amazon last year cut more than 27,000 jobs, part of a record-breaking wave of U.S. tech layoffs that followed industry over-expansion during the pandemic.

In total, the media industry shed over 21,000 jobs last year, the highest total for the sector since 2020, according to Challenger, Gray & Christmas, Inc.

Amazon’s shares were up 1.6% in afternoon trading. Twitch has also seen recent viewership increases. 

“While the Twitch business remains strong, for some time now the organization has been sized based upon where we optimistically expect our business to be in three or more years, not where we’re at today,” explained Clancy in his statement. “As with many other companies in the tech space, we are now sizing our organization based upon the current scale of our business and conservative predictions of how we expect to grow in the future.”

MGM is expected to spend more than $35 million to promote the new James Bond movie No Time to Die by the end of October, according to advertising intelligence company MediaRadar.

The spending follows a long-quiet period by movie studios as COVID-19 kept people from attending films in theaters. 

MediaRadar said MGM has spent $20 million to promote No Time to Die from July through September. The spending is primarily centered on traditional TV--mainly ESPN, NBC, MTV, Adult Swim, CBS and ABC--with a small digital premise.

No Time to Die, opening Friday, was originally expected to hit theaters last April. From December 2019 to March 2020, MGM spent more than $9 million promoting the film, trailer aired on Fox, NBC, CBS, ESPN, TNT and Comedy Central. A very small percentage of spending was dedicated to digital advertising in outlet including Snapchat, E! News, Vulture, Fandango and NHL.com.

“Last year, the ad spend never really ramped up once COVID-19 emerged,” said Todd Krizelman, CEO & co-founder, MediaRadar. “The initial delay helped in that it pushed the release to April. In early March, it was clear that release schedules might adjust so the studio was able to avoid spending too heavily on marketing.” 

Metro-Goldwyn-Mayer  Studios has hired Sam Toles to the new post of SVP, digital and new platforms, where he’ll head up efforts around digital native and short-form content development and distribution.

Toles will report to Kevin Conroy, MGM’s president, digital & new platforms and will be based in Los Angeles.  Toles will also be tasked with using MGM’s existing intellectual property and creating new IP, working with theatrical, scripted, unscripted and distribution teams, that can be offered on new digital platforms.

Toles most recently was SVP/GM of Vimeo’s Entertainment Group, where he helped with the launch of Vimeo’s first slate of original programming including HBO’sHigh Maintenance, the Emmy-nominatedGarfunkel and Oats: Trying to be Specialand the Oscar-nominated animated shortPear Cider and Cigarettes. 

Toles’ career started in theatrical marketing at New Line Cinema and Warner Brothers, followed by home entertainment marketing roles at Paramount Pictures and Rhino. He then joined Fremantle Media as VP of business development, overseeing media licensing for their extensive stable brands includingAmerican Idol,America’s Got TalentandThe Price Is Right. Toles also served as VP of content strategy for Gaiam, which distributes a digital SVOD service.

“Sam’s experience in digital media will accelerate our efforts in developing and creating compelling new content for today’s digital platforms, and will help to shape our company’s strategy as new platforms emerge,” said Conroy, in a statement.

“I am so glad we could attract Sam to join MGM. He is an innovative thinker and has his finger on the pulse of what’s next. We’re all about what’s next,” added Mark Burnett, MGM’s president, television group & digital. 

Interlude, a New York-based startup that develops interactive TV shows with a personal twist, said it has locked in a “strategic investment” from Metro-Goldwyn Mayer Studios.

The amount of MGM’s investment was not disclosed, but it was part of an $18.2 million round in Interlude by Warner Music Group, Samsung and returning investors that include Sequoia Capital and Intel Capital. Tied to the investment, MGM chairman and CEO Gary Barber has signed on a “board observer” at Interlude.

Interlude said it will use the funding to broaden content development in areas such as drama, comedy, pop culture, news and music.

Interlude adds interactive elements to the mix by letting users engage directly with programs, by answering polls and questions, selecting camera angles and making decision on the direction of the story being told. Speaking at the Next TV Summit in New York, Interlude president and COO Jim Spare said viewers spend an average of seven minutes clicking on different outcomes.

“We’re finding that young audiences love the idea of being able to talk to a video and interact with a video,” he said then. “It’s truly personal and it’s driving retention and engagement rates.”

“Though video has always been a very powerful storytelling medium, it has not, to date, been able to adjust and adapt from viewer to viewer,” Yoni Bloch, founder and CEO of Interlude, said in a statement about today’s funding announcement. “But we are aiming to allow filmmakers and content to form a unique connection with each viewer.  This has the potential to change the relationship between film and individual audience members.”

“MGM continues to expand its footprint by identifying innovative platforms and technologies, such as Interlude, to introduce new audiences to our creative content,” added Barber. 

MTV and BBC are among examples of programmers that have developed Interlude-powered content.