Plex, the free streaming app, laid off approximately 20% of its staff, TechCrunch has learned, which will affect all departments, including the Personal Media teams.
“This is by far the hardest decision we’ve had to make at Plex,” CEO Keith Valory said in a statement. “These are all wonderful people, great colleagues, and good friends. But we believe it is the right thing for the long-term health and stability of Plex.”
The streaming app gives users a single destination to upload and organize content (video, audio and photos) from their own server while also allowing them to stream it via mobile app, smart TV or desktop.
In recent years, however, Plex has invested in free, ad-supported streaming (FAST) and live TV offerings. The FAST market has become saturated as many companies have entered the space. Plus, the overall advertising industry has taken a hit, making it harder for companies to earn enough revenue.
Valory noted in his statement that the company was significantly impacted by the slowdown. “While we adjusted our business plan last year after the shift in equity markets to get us back on a path to profitability without having to cut personnel expenses, the downturn in the ad market in Q2 put significantly more pressure on our business and ultimately it became clear that we would need to take additional measures in order to maintain a confident path to profitability within the next 18 months,” he said.
He added that the company is still expected to see 30% growth this year.
According to a Slack message from Valory, obtained by The Verge, which first reported the layoffs, Valory noted that 37 employees would be impacted.
Additionally, it seems that Plex may have had another round of layoffs earlier this year. Five months ago, a former account executive posted on LinkedIn that they were “affected by company layoffs.”
As of January, the company had 175 employees, and its revenue was in the double-digit millions.
Updated 6/29/23 at 12:10 p.m. ET with a statement from CEO.
The problem isn’t AI, but interest rates.
Silicon Valley lived for a long time with an investor market that didn’t really have anything better to invest their money in, so they would invest in a series of Internet companies with the hope that one of them would make it rich. Now that lending money can make you more money, it isn’t worth it to invest in companies or ideas that don’t make money right now.
The VC funding that Silicon Valley relied on dried up. If you are a startup, you need to be profitable before you burn through your cash. If you aren’t a startup, you don’t have to worry as much about new tech cannibalizing your core businesses, so they are more willing to cut product lines.