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Samsung’s Content Unit Hit by Layoffs, Exec Departure (Exclusive)

Samsung’s Media Solutions Center America, which is responsible for the company’s Milk Music and Milk Video services, has been hit by layoffs and a key exec departure over the last couple of weeks, Variety has learned. These events have occurred as Samsung executives take a closer look at many of its business units, which could spell trouble for the company’s content plans going forward.

Media Solutions Center America saw dozens of staffers laid off earlier this month, according to multiple sources. Exact numbers are hard to come by, but one source estimated that as much as 15% of the staff may have been affected. I’ve been told that MSCA employed around 250 people total before the cuts went into effect.

A Samsung spokesperson declined to comment on “rumors and speculation” when contacted for this story, adding: “What we can tell you is that Samsung remains committed to delivering engaging, connected entertainment experiences through its Milk platform, and we continue to expand our library of music, video and virtual reality.”

These layoffs come just a few weeks after Kevin Swint, Samsung’s VP of content and services, left the unit, according to sources. Swint came to Samsung over two years ago from Apple, where he ran the iTunes video business. At Samsung, he was most recently responsible for Milk Video, a shortform video curation and aggregation app that launched in late 2014.

Milk Video has been part of a new approach toward mobile media within Samsung that began with the launch of Milk Music in March 2014. Previously, Samsung was trying to directly compete with download stores like iTunes and Google Play to generate additional revenue through media sales. But its own Media Hub apps never caught on with consumers. Samsung eventually decided to get out of the content store business altogether, shuttering digital storefronts for music, video and ebooks last summer.

SEE ALSO: How Google Play Is Closing the App Gap With Apple

Instead, the company aimed to build free and ad-supported services that wouldn’t necessarily make a lot of money on their own, but help Samsung products stand out in an increasingly crowded market — something that the company desperately needed as sales of its flagship phones fell well below expectations.

Milk Music was the first attempt for such a service-centric approach. The app offers users Pandora-like personalized radio streams through a unique user interface, and was initially available only on select Samsung handsets, but eventually launched on the Web and Samsung smart TVs as well.

Milk Video launched in November with a similar design language, and a premise to become a more curated alternative to Google’s YouTube. Samsung struck partnerships with mobile video makers like Tastemade, CollegeHumor and Machinima for the service and secured some exclusive content from Funny or Die and Vice.

The company also launched a service called Milk VR for its Gear VR headset in January, and there was talk that Samsung might over time launch other Milk-themed apps for additional verticals like sports. But with the recent cuts, it’s unclear whether any of those apps will see the light of day — especially because Samsung is reportedly on a cost-cutting mission that may see the company shift course on a number of fronts.

Jay Y. Lee, who is expected to take over as Samsung’s chairman any day now, is likely going to focus much more on profitable parts of Samsung’s business and move away from a strategy that was purely based on scale, according to a recent Wall Street Journal report. Lee is also thought to be much more open to partnerships with third parties, which could potentially see Samsung outsource media for its devices altogether.

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