There are currently 470 million gamers watching online gaming content. As explained by Peter Warman, CEO of Newzoo, “games are evolving towards cross-screen transmedia franchises, thusly Increasing focus on communities of both gamers and viewers.”
Twitch TV was founded in 2007 by 3 Yale graduates and a fourth member from MIT. The website was originally called Justin TV, which was broadcasting the life of founder Justin Kan, popularising the term ‘lifecasting’. A few months later, the founders, seeing the potential of their idea, chose to open their website to over 60 different channels. The various content allowed to attract a lot more traffic. In October 2007, Justin TV continued their expansion by becoming an open-network, thusly allowing any member of the public to register and start broadcasting. This enabled the company to notice the ‘hype’ around the gaming channels. As a result, the company launched Twitch TV to focus on this market segment and is now owned by Amazon since 2014 after a $970 ml acquisition. Following a freemium model, Twitch monetises its platform in 3 different ways: advertising, subscriptions, and partners.
- Regarding advertising: the web page contains 13 ad units: 3 video ad units, 4 standard IAB ad units & 6 native ad units. Costs per impression charged by Twitch are highly seasonal, ranging from $2-10 per 1000 views.
- For subscriptions, customers can buy Twitch Turbo to access ad-free content for 8.99 per month.
- Finally, through their partners program: partners can monetise their content in the following ways:
- Through a cut from ad revenue + $0.9-2 per 1,000 views.
- By integrating merchandise sales via Teespring, one of Twitch strategic partners.
- Through the Monthly channel subscription – with 50/50 split of the 4.99 monthly fee between Twitch and the streamers.
- Finally, with donations from users.
Twitch is used by almost 50% of Millennials. In 2014, the company ranked 4th in terms of general bandwidth consumption, behind Netflix, Google and Apple. Furthermore, the company is now organising eSport events, where teams of professional gamers battle it out for cash prises in front of physical crowds & Twitch viewers. For instance, a Counter-Strike event in Cologne attracted 1.3 ml viewers. All major game developers & publishers maintain channels on Twitch to conduct live-streams showing off their new games. SuperData Research shows top Twitch personalities can generate incomes above $30,000 a month.
Twitch TV’s main competitor is Google’s YouTube Gaming, a curated version of the massive video site focusing on live gameplay, and aspiring to become the single destination for all types of game content videos. Their value proposition differs from Twitch TV’s in several ways. First the “Personalization/customization” of the interface: streamers can use a mix of live and non-live clips, sometimes personalized based on the games and channels you follow, allowing the use of filters for specific content. Secondly, Youtube gaming reduces search time by displaying large icons, making it easier to find what you want to watch. Finally, in terms of Youtube Gaming’s revenue model, the company follows a similar partner programme, with a revenue sharing model.
