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.
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 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