Otter Media laid off about 10% of its staff today in a sweeping reorganization of its digital properties intended to make these assets more competitive and profitable.

CEO Tony Goncalves sent an email to staff today outlining changes that he said would better position the digital media company to capitalize on the opportunities in a rapidly changing digital landscape.

Otter’s consumer brands would be consolidated under the Ellation division, which operates the anime-focused Crunchyroll and the subscription service VRV. Gamer-focused Rooster Teeth will be folded into the Ellation business unit, together with WarnerMedia-owned Machinima, which Deadline previously reported would become part of Otter Media on Jan 1.

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Fullscreen, the one-time multi-channel network that has evolved into an influencer marketing and branded-content agency, will be divided into three independent divisions: creator services, the brand studio and brand services. Otter also will consolidate shared services like legal and human resources.

“As a result of these changes, the size of the organization has been impacted, and we had to say goodbye to valued employees,” Goncalves said in a statement to Deadline.

Otter Media employs about 1,400 people. The layoffs will impact both full-time employees as well as contractors.

Since AT&T completed its $81 billion acquisition of Time Warner, the Dallas-based telecommunications and media conglomerate has been moving rapidly to dispose of digital offerings with niche audiences, even as it lays plans for an ambitious competitor to Netflix, which is scheduled to launch next year.

The telecommunications giant began laying the groundwork for consolidating AT&T and WarnerMedia’s various digital assets last summer, when it acquired the The Chernin Group’s controlling stake in Otter Media . At the time, it said it would fold the subscription, advertising and content company the two formed in 2014 into AT&T’s WarnerMedia.

Last month, WarnerMedia announced plans to shutter cinephile streaming service FilmStruck, only to backtrack slightly after a fierce backlash led by many A-list directors and other Hollywood figures. The company ended up compromising by bringing back streaming for Criterion Collection titles, a component of FilmStruck’s offering.

WarnerMedia also shuttered DramaFever, a streaming service specializing in Korean dramas, which abruptly ceased operations on Oct. 16. Turner similarly pulled the plug on its edgy digital content and TV studio, Super Deluxe.

Founded in 2000 and long a trailblazer in original shows for gamers, Machinima was acquired in full by Warner Bros in November 2016. When the property underwent a significant rebrand early in 2018, it said its properties were attracting more than 140 million monthly views.

Russell Arons, who replaced Chad Gutstein as CEO in 2017, described an effort in 2017 “to truly take the time to evaluate what Machinima is and what our true ‘north’ is.” She told Deadline last February that the management team had ruled out any subscription models, despite a challenging environment for digital video advertising, 80% of which is controlled by Google and Facebook.

Here’s the full memo: