Amazon will cut hundreds of jobs at Prime Video, just weeks before it introduces ads to the service

The big picture: Amazon, a company that generated $9.9 billion in profit last quarter and is about to introduce ads to all Prime Video subscribers unless they pay extra to remove them, has just confirmed it will be laying off hundreds of employees across its Prime Video and MGM Studios divisions. The news come on the same day that Amazon said it would be cutting 35% of the workforce, or 500 jobs, from subsidiary Twitch.

No tech company cut as many jobs as Amazon last year. The firm laid off 27,000 workers , almost three times the number of people Facebook and Microsoft let go, and more than double the number of jobs Google cut. Mike Hopkins, senior vice president of Prime Video and Amazon MGM Studios, told employees, "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." Amazon's announcement came on the same day that Twitch CEO Dan Clancy told staff that 500 employees would be let go from the company despite its efforts to cut costs over the last year.

He said it was clear that Twitch was larger than it needed to be based on more realistic predictions for its future growth. Mass layoffs are always unwelcome news, but Amazon's feel especially jarring when Prime Video is set to introduce ads to its movies and TV shows on January 29. Customers will have to endure up to four ad breaks per hour unless they hand over $2.99 per month on top of their regular subscription payment.

Amazon has spent huge amounts on its media enterprises in recent years. In addition to the $8.5 billion deal for MGM, it spent $465 million on the first Season of The Lord of the Rings: The Rings of Power, making it the most expensive show ever made. Amazon, which has a market cap of $1.59 trillion, faced plenty of criticism last month following reports that one of its warehouses in New York posted a flier suggesting workers write to the company mascot , Peccy, if they or someone they knew were facing financial hardships during the holiday season..