Why Twitch earns billions and is the king of game streaming platforms

  • More than a million people are tuned into Twitch at any moment to watch people playing video games
  • Top streamer ‘Ninja’ earns seven figures a month
PUBLISHED : Wednesday, 28 November, 2018, 1:01am
UPDATED : Wednesday, 28 November, 2018, 3:36am

Seven years on from the rebranding of its original incarnation, video game live-streaming platform Twitch boasts more than a million people tuned in at any moment – and interest is rising.

Today’s top “streamers” are celebrities who can earn fame and a healthy living from competitive video gaming.

Will video games streamed as a service change the business forever?

Co-founder Emmett Shear says his light bulb moment came in 2010, four years before Amazon swooped to net Twitch for a cool US$970 million.

“In 2010, I realised the content I loved, that I was watching on, was all gaming content,” he says.

“[I] loved the streamers, so I decided we would start focusing on just gaming, and there was a huge opportunity there.”

So Twitch came into being – the name alluding to a player’s action response time.

Twitch brands itself as a global community showcasing “unique, live, unpredictable experiences created by the interactions of millions”. The entertainment ranges from “casual gaming to world-class e-sports to anime marathons, music and art streams”.

China’s blocking of the platform last September was a bump in the road, but the company was already going strong on 2017 revenues of US$1.7 billion. That’s over half of a gaming sector worth an estimated US$3.2 billion that year, according to data from market intelligence agency SuperData.

SuperData says Google’s YouTube platform held a mere 22 per cent of that market share in 2017 as “despite having half the GVC [gaming video content] audience of YouTube, Twitch’s audience is more engaged and willing to spend on their favourite broadcasters”.

I don’t think watching video games is all that different from watching grown men kicking a ball around a field or someone cook a pie
Emmett Shear

Laurent Michaud, director of study for France’s IDATE digital think tank, explains why that is: “Twitch has been conceived for video game spectators, unlike other platforms.”

Some 670 million people around the world watched at least one video game stream in 2017, following along as players shot at zombies, cast spells or constructed their own imaginary universes.

Shear draws a parallel with watching television.

“If you understand watching TV, maybe you like watching cooking, travel, talk shows. It’s fun in all of those cases to watch people who are the best in the world at what they do …

“I don’t think watching video games is all that different from watching grown men kicking a ball around a field or someone cook a pie.”

Spectators can take part on the sidelines by posting comments and emoticons as “play” unfolds, as well as make donations to favourite players.

Shear, who says Twitch wants to help highlight budding gaming talents, says the platform’s main revenue streams – advertising and subscriptions for “privileges” such as VIP “badges” and access to special emojis – enable gamers to make cash from their content.

Even so, the vast majority will not come close to Fortnite legend Tyler “Ninja” Blevins, who recently told sports multimedia group ESPN that his gaming nets him a monthly revenue in seven figures and who boasts more than 12 million Twitch followers.

We really think it’s the most important thing to do, to help small streamers make it and go full time
Emmett Shear

Whereas technical quality was the initial priority for Twitch, today it is offering visibility to “small streamers” in the hope they will eventually earn greater popularity, and with it, more revenue.

Regarding how to “make it” in revenue terms, “it’s very complicated to do it for the money – that only works for very few people,” says communications specialist and Twitch player Mylene Lourdel. “Often it’s just a bit of extra cash to allow you to invest in material.”

But for Shear, “we really think it’s the most important thing to do, to help small streamers make it and go full time and maybe find a way to make a living.”

He says an ideal game “enables audience interactivity, when you have enough downtime in between matches or during a slow part in the match that you get a chance to interact with the audience – or even better if the game itself engages people to interact with you.”

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Although big-ticket games such as League of Legends or Fortnite dominate, those so inclined can follow fringe offerings such as cooking channels that may emulate South Korea’s “mukbang” craze, a social eating trend where people live-stream themselves eating food.

Coincidentally, chowing down online in front of virtual dining partners helps bring Twitch full circle back to the early days of – the original form of which was a single channel featuring co-founder Justin Kan broadcasting his life 24/7.