Amazon Lays Off Hundreds of Prime Employees with This Memo

However, that number has decreased by several hundred this week as Amazon announced that it would be initiating significant layoffs within the Prime and MGM departments. And the press got a hold of the memo explaining exactly why they’ve made this tough decision.

And there are essentially two reasons why this mass firing occurred. First, Amazon hired far too many people during the pandemic in 2020 and now needs to scale back, and second, even the giant company is being affected by the ever-increasing inflation rates.

So many are wondering: If Amazon is doing so well, why are they making huge cuts to their staff?

In order to stay on top, Amazon needs to tighten its purse strings during this difficult time, and the easiest way to do so is to cut back on staff.

The layoffs are occurring within the Prime Video and MGM divisions, which are struggling due to some big financial mistakes. But it’s really Amazon’s entire entertainment division that is in trouble. 

Financial experts are now arguing that the recent setbacks Amazon is experiencing are due to issues from the purchase, though Amazon hasn’t responded to those theories directly.

Obviously, Prime Video was hoping that its huge investment in “The Lord of the Rings: The Rings of Power” Season 1 would generate incredible profits, but that is not what happened. While 25 million people watched the first episode, reports say far fewer finished the season.

Prime Video’s senior vice president made the announcement through a company-wide memo, and while it doesn’t explain exactly why the decision was made, it does give some insight into the situation. And luckily, it has been leaked to the public.

He wrote, “We’ve taken significant steps towards our long-term vision of making Prime Video the first-choice entertainment destination for customers worldwide, and I’m proud of everything we’ve accomplished as a team to date.”

And continued, “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.”

Mike told the world, “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.”

Mike also expressed that this was a “difficult decision to make” and that he and his team “do not take [it] lightly.”

Though the memo didn’t specify exactly what kind of severance package the now-former employees will receive, historically, Amazon has offered 60 days of full pay and benefits, which is considered generous in the corporate world.

Which many have taken to mean that Prime Video will be spending its time, energy, and money on encouraging more sales and improving program technology.

That is unless members decide to pay for the ad-free option, which will cost them an additional $2.99 per month. And since there are already 200 million Prime Video members, even if only a fraction of the subscribers opt for the ad-free membership. Prime Video will increase its monthly intake significantly.

Twitch, Amazon’s video game live streaming service, is about to let go a whopping 500 employees.

Few details have been released, but it seems that these employees will now be focusing on Prime Video, and there’s even a rumor that Freevee will stop producing content in the near future. Of course, if that happens, Freevee employees may be the next to go.

The SAG-AFTRA strikes last year certainly played a role in the current dilemma of Amazon’s entertainment departments. Many film and television projects were shut down during the strike, which cost the company money.

Minimum compensation has increased by 7% for actors and 11% for stand-ins, AI use is now limited, relocation bonuses have been increased, and, most importantly, streaming bonuses have also gone up. All of this means Amazon will have to pay more to produce and stream content.

From compensation structure to office organization, Amazon likes to do things differently, and those who have experience working with other entertainment ventures simply don’t like working for Amazon.

As mentioned, Amazon employs a total of 1.5 million people, but Prime Video makes up 10,000 of those employees, and MGM another 4,000.

And while no one knows what the future holds, many are hopeful that Amazon has finally let go of enough staff to keep itself afloat and that 2024 won’t see nearly as many layoffs as 2023.

However, clearly, the entertainment businesses within the giant company are in a bit of trouble, and it’s likely that more changes will need to be made in the near future.

That being said, no one knows what the future holds, and with the layoffs, the new payment requirements with SAG-AFTRA, and Amazon’s seemingly unimpressive understanding of the entertainment industry, that assessment could be wrong.