Amazon.com has announced its intention to terminate several hundred employees within its streaming and studio divisions, encompassing Prime Video and Amazon MGM Studios. The decision conveyed through an internal communication on Wednesday, aligns with Amazon's ongoing workforce reduction initiatives witnessed over the past two years. The affected employees in the Americas will receive notifications on Wednesday, while those in other regions will be informed by the week's end. This move echoes Amazon's broader trend of downsizing, as the online retail giant eliminated over 27,000 positions in the previous year amid a significant wave of layoffs in the US tech industry following the pandemic.

Mike Hopkins, Senior Vice President of Prime Video and Amazon MGM Studios, explained in a note that the company identified opportunities to scale back or discontinue investments in certain areas while intensifying its focus on content and product initiatives with the most substantial impact.

Despite these layoffs, Amazon has been proactive in its media business investments, including the $8.5 billion acquisition of MGM and an expenditure of approximately $465 million on the first season of "The Lord of The Rings: The Rings of Power" on Prime Video in 2022. The company is also preparing to introduce ads on Prime Video and a pricier ad-free subscription tier in certain markets, aligning its strategy with competitors such as Netflix and Walt Disney.

In the broader context of industry trends, several companies that underwent significant layoffs in 2022 and 2023 are now strategically targeting specific projects and divisions to optimize resource management. Amazon recently made cuts in its Alexa voice assistant division, while Microsoft implemented layoffs in its LinkedIn professional network.

Furthermore, Amazon's Twitch service is reportedly set to terminate around 35% of its workforce, equivalent to 500 employees, according to a report published on Tuesday. Despite these organizational shifts, Amazon's shares, which surged by over 80% last year, experienced a 1.5% increase in afternoon trading.