What just happened? Twitch CEO Dan Clancy has announced plans to reduce the company's headcount by just over 500 employees, a roughly 35 percent reduction in staff. The executive shared an internal email sent to employees earlier today outlining the changes, which are needed to help rightsize the company. Clancy said that despite efforts to cut costs over the last year, it has become clear that Twitch is still larger than it needs to be given the size of the business.

Put another way, Twitch over the last three years has been sized optimistically based on where they want the business to be versus where it actually sits today. That's no longer sustainable and like many others in the tech sector, they are resizing based on a more conservative prediction of future growth.

Clancy said the decision had to be made to ensure they can continue to serve streamers sustainably without impacting their ability to support them. Last year along, the company paid out more than $1 billion to streamers.

Twitch is wasting no time in getting the ball rolling. Clancy said emails will be sent "in the next few minutes" outlining what will happen next, both for those affected by the restructuring and employees that still have a job. Clancy also said he was disappointed that news of the cuts leaked yesterday, leading to undue anxiety over the past several hours.

Twitch is one of those concepts that I'm still surprised actually took off. Never in a million years would I have guessed there would be a market for video game live streaming, or that it would be successful. That there is a subset of people who would rather volunteer to watch someone else play a game instead of playing it themselves continues to blow my mind. Of course, I also didn't envision social media and influencers being a thing and those play hand in hand with Twitch, so there's that.

Clancy apologized to everyone leaving Twitch and thanked them for their hard work to help build the platform to this point.

Image credit: Stanley Li, Rdne Stock