In an email shared with employees this week, Amazon has announced job cuts for “several hundred” employees across Prime Video and Amazon MGM Studios.
Having purchased MGM back in 2022 for $8.5 billion, Amazon explained that the layoffs were in part due to issues carried over from the deal.
Cuts Said To Spark Product Opportunities
Senior Vice President of Prime Video and Amazon MGM Studios, Mike Hopkins shared the email that explained the reasons for the layoffs, as well as the company's future focus.
A desire to increase time and money in order to bolster content and product offering is behind the job cuts, according to Hopkins.
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“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. As a result of these decisions, we will be eliminating several hundred roles across the Prime Video and Amazon MGM Studios organization.” – Hopkins
Hopkins continued, saying “Our industry continues to evolve quickly and it’s important that we prioritize our investments for the long-term success of our business” as well as “this is a difficult decision to make and one that my leadership team and I do not take lightly. It is hard to say goodbye to talented Amazonians.”
Those impacted by the role reductions in the Americas will be notified by midday January 10th, Pacific time, with all other regions being made aware by the end of the week.
How Did We Get Here?
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?
What Comes Next
According to Hopkins' plan, this latest round of job cuts aims to free up budget that can in turn “move the needle” so future spend can focus on programming, marketing, and product.
An ad-supported tier is also expected to launch on the Prime Video platform by the end of January. The additional $2.99 a month coming from users who’d prefer to remain ad-free is estimated to earn the division billions in incremental revenue.
Other than that, more tangible information on what Amazon Prime plans on producing is yet to be seen.