Entertainment companies face tidal wave of layoffs in rocky start to new year

The new year is off to an ominous start for the entertainment industry, which is facing heavy layoffs at companies spanning film, TV, music and gaming.

The tidal wave of job cuts has affected several major players, including Amazon, Pixar, Discord and Universal Music Group.

Entertainment, media, gaming and tech companies have been broadly under pressure to reduce costs amid economic headwinds, Hollywood strikes, corporate consolidation and other factors following rapid hiring during the COVID-19 pandemic.

UMG, the music industry’s largest record company, said Friday in a statement to The Times that it aims to create “efficiencies in other areas of the business so we can remain nimble and responsive to the dynamic market” in response to reports that the record label is poised to lay off hundreds of employees in the coming weeks.

The Times has independently confirmed that UMG, which has its operational headquarters in Santa Monica, is bracing for cuts — a move that had already been discussed during a quarterly earnings call in October and alluded to in an internal memo to staff on Monday.

“We continue to position UMG to accelerate its leadership in music’s most promising growth areas and drive its transformation to capitalize on them,” a spokesperson for UMG said in a statement provided to The Times. “Over the past several years, we have been investing in future growth—building our ecommerce and D2C [direct-to-consumer] operations, expanding geographically, and leveraging new technologies.”

The latest UMG news landed in the wake of other reports of job losses across the entertainment business, perhaps most notably at Amazon. Earlier this week, the tech giant announced plans to let go of several hundred employees working for its streaming platform, Prime Video, and its film and TV arm, Amazon MGM Studios.

”[W]e’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,” wrote Mike Hopkins, senior vice president of Prime Video and Amazon MGM Studios, in a note to staffers. “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.”

At the same time, Amazon’s livestreaming platform Twitch — a force in the gaming industry — said it planned to lay off about 500 workers, or about one-third of the staff.

In a blog post, Twitch Chief Executive Daniel Clancy said the company had been working to build a more sustainable business, cutting costs throughout the year.

“Unfortunately, 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,” he wrote.

Other tech and gaming companies in Northern California have been hit hard with layoffs this month, continuing a trend of cuts that first began early last year.

Game company Unity Software, based in San Francisco, announced another round of layoffs as part of its restructuring efforts. A filing with the Securities and Exchange Commission noted that the company would be cutting 1,800 jobs — roughly 25% of its current workforce — as it “restructures and refocuses on its core business, and to position itself for long-term and profitable growth.”

Staff at messaging platform Discord were impacted as well by some 170 cuts — nearly 17% of the workforce. The San Francisco company has deep ties to the video game industry; gamers often use the service to voice-chat as they play games together, or chat in channels about gaming.

“We grew quickly and expanded our workforce even faster, increasing by 5x since 2020,” Discord Chief Executive Jason Citron wrote in a memo obtained by The Verge. “As a result, we took on more projects and became less efficient in how we operated.”

On Thursday and Friday, reports of layoffs at Pixar began to surface as well. The Disney-owned animation studio is expected to cut up to 20% of its staff — roughly 300 jobs — according to TechCrunch. However, a source close to the situation who was not authorized to comment told The Times that the 20% figure is inflated.

The staff reduction at Pixar comes as the once-preeminent animation studio struggles to break out of a COVID-19 pandemic-induced slump at the box office.

Times staff writer Wendy Lee contributed to this report.

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