twitch
Twitch is an online streaming platform focused mainly on live streaming video games that Amazon bought for $970m in 2014. Today, it has at least 1.5 million viewers globally at any point in time and has 17.5 million visitors daily.
Last year, Twitch generated revenue of $1.54b compared to YouTube’s gaming revenue of $1.46b. Twitch was founded in 2007 to broadcast Twitch’s CEO Justin Kan’s life around the clock and was later relaunched to others to create their own channels. Though Google almost bought Twitch in 2014 for ~$1b, the deal didn’t go through due to concerns about antitrust violations.
Twitch's business model:
Twitch generates most of its revenue on subscriptions and advertising. It also sells merchandise and viewers can buy Twitch’s digital currency which contributes to its revenue. Twitch shares 50% of its revenue with its content streamers (a mix of gamers and commentators).
Some data on Twitch viewers:
Twitch had 3.8 million unique broadcasters as of February 2020
Twitch’s share of total hours of game streaming and viewing for Q1 2020
Views - 65%
Streaming - 72%
Hours watched on game streaming platforms as of Q4 2019:
Twitch - 2.3 billion hours
YouTube gaming - 0.9 billion hours
Microsoft’s Mixer - 0.1 million hours
On average, Twitch users watch 95 minutes every day
The U.S. contributes to ~25% of Twitch's viewer traffic.
Last year, 42% of 16-24-year-olds said that they watched a game streaming event recently.
Twitch subscription:
Amazon recently renamed Twitch Prime to Prime Gaming, and it is offered as a bundle along with Prime membership.
Amazon's six acquisitions to augment Twitch:
Goodgame manages ad deals and brand for content creators in e-sports
Bebo was a social network acquired for ~$25m for working on Twitch Rivals - a competitive series for Twitch users
IGDB (Internet Games Database) was acquired by Twitch to improve its search capabilities.
Pursuit (formerly Revlo) enabled Twitch streamers to offer virtual currency to their viewers – it was acquired by Amazon in Dec 2018.
Twitch acquired Clipmine, a video indexing platform to help users get more relevant content during searches.
Curse - a game database and VoIP provider acquired by Twitch in 2016
Microsoft Mixer:
Microsoft acquired game streaming service Beam in August 2016 and renamed it, Mixer. After failing to attract a large audience, it officially closed Mixer in July 2020 and moved the partners to Facebook Gaming.
The global gaming market is expected to exceed $180b by 2021. Amazon also recently launched its own game Crucible on May 2020, and it was rolled back into beta version last month, after failing to attract an audience. With renaming Twitch Prime to Prime Gaming and other investments in gaming, Amazon is looking to create a solid business in the gaming industry by providing both games (like Crucible) and a streaming platform. - Nat
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Other companies in the gaming ecosystem:
Microsoft will launch its subscription-based game streaming platform xCloud for Android devices on Sept. 15. xCloud will be available as a part of the Xbox Game Pass Ultimate subscription plan (that was previously available only for Xbox One consoles and Windows 10 PC), which costs $15/month. The service is being launched in 22 countries, including North America and Europe.
Gaming in the last quarter:
Microsoft's Xbox content and services generated $1.8b in revenue in the last quarter, an increase of 65% YoY.
Sony's gaming division reported a revenue of $5.7b, up from $4.3b during the last year.
In the last quarter, game app spending in the App Store reached $11.6b, and Play Store reached $7.7b, with an overall YoY increase of 27%.
Cloud gaming and Subscription services:
Google released cloud gaming service Stadia in Nov. 2019 for $11.99/ month.
Nvidia launched GeForce Now in Feb. 2019 (for $6.49/month). Multiple game publishers weren't satisfied due to licensing disputes.
Sony has a cloud platform, PlayStation Now ($9.99/month), but the games can be accessed only through its consoles or on PC.
Apple launched its subscription platform Apple Arcade ($4.99/month) in Sept. 2019.
Microsoft's gaming and Xbox head Phil Spencer said the company isn't considering Sony and Nintendo as rivals due to the lack of cloud infrastructure. He added that Amazon and Google would be its main competitors due to its infrastructure capability.
The global gaming industry is estimated to generate $160b in 2020.
A version of this section previously appeared in the Aug. 4 issue of Inside Business.