The MGM Studios and Prime Video divisions at Amazon have grown their personnel at a faster rate in recent years than any other team, which is what led to the latest layoffs.
In a recording of an internal all-hands meeting held in July, Mike Hopkins, the executive leading the division, expressed concerns about the exponential increase in team size, signaling a need for efficiency.
Hopkins revealed that the team was on track to have 8,000 employees by the end of 2023, a 2.5-fold growth in just three years, the fastest expansion rate within Amazon. He acknowledged the need to reassess headcount growth, especially given economic uncertainties and the team’s unprecedented pace of expansion.
Prime Video, in fact, was the first Amazon team to implement a hiring freeze in 2022 due to its accelerated growth.
Despite Amazon’s spokesperson remaining silent on the matter, Hopkins’s comments provide insights into the substantial growth the Prime Video and MGM Studios team underwent before the layoffs.
It suggests that Amazon might have overestimated the demands of its video streaming service, a trend mirrored across various divisions within the company, leading to a significant wave of layoffs since late 2022.
Mixed Results for Prime Video Investments
While Amazon has poured substantial investments into its video streaming service over the years, acquiring the MGM movie studio for $8.5 billion in 2022, the results have been mixed.
High-budget productions like Lord of the Rings: The Rings of Power have faced challenges, with only a fraction of US viewers completing the series.
In response, Amazon is now making strategic shifts. Hopkins announced layoffs, primarily aimed at optimizing investments and focusing on projects with the most significant impact. This move is part of a broader cost-cutting campaign that has seen at least 27,000 job cuts at Amazon since late 2022.
Looking forward, Amazon is exploring new revenue streams for its entertainment unit, introducing advertising on Prime Videos starting in late January. Users can opt-out of ads by paying an additional fee, a move that Evercore estimates could contribute up to $15 billion in incremental ad revenue annually.
Additionally, Amazon has introduced audience-targeting ads for its Thursday Night Football broadcasts, potentially adding another $100 million in sales. These strategies reflect Amazon’s commitment to adapt and evolve in the dynamic landscape of the entertainment industry.