How is it possible for them not to be profitable? Don't they take a 50% cut on subs?
Amazon has for years been saying that they think that Twitch is under monetized. In their minds, 20% of watch time could be ads, just like regular TV. Streamers don’t like ads: it kills the vibe when your audience gets a 2 minute timeout. So streamers aren’t running enough ad breaks, and try to support themselves via memberships, merch and other alternative monetization methods. And for some, Twitch is only advertising for the real money-maker on another site. So Amazon doesn’t get the ad money they think they should get, and they only get a cut of memberships.
So then it’s a question of how many servers and engineers are needed to support Twitch, because that will determine profitability.
Also they should primarily look at other ways to monetize. Subs are still the best way, but not everyone has that kind of money.
One other big problem is that there former heads just didn’t get streamers and they ran a lot of big ones out of the building. One streamer with a crazy amount of paid members was treated poorly in an amateurish way.
I think they have new management now which at least seem to be a bit more in tune with what streamers needs are and some of the painpoints.
Manually running enough ads should also stop the auto scheduler from running ads and disable prerolls too
They do: as a streamer, you've got a button to trigger an ad break at any time. But the streamers rarely push it, for the reasons already mentioned. Video ads pay so little that it's not worth it to streamers to annoy their audience that way, when direct monetization methods which depend on happy viewers (subscriptions, shout-outs, merch) are much more profitable to them.
There's a real problem of incentive misalignment between the streamers and the platform re: monetizing the stream by sticking ads in it, and I don't think it can be resolved; hence the layoffs.
I first bought YT premium after I found out the YT model of ad-free is ONLY the equivalent to buying Twitch turbo. A membership to the channel will still get you ads.
And having YT premium changed the game of how I consume all media.
Thanks, Twitch.
But that's just 5% of ads.
And if you change that to 10% it is, as far as I can tell, already in a area where most would seriously consider leaving the platform for good and at 15% I think hardly any streamer would still be on twitch.
Lets be honest the only reason normal TV got away with 20% is because it had no alternatives, and often anyway just ran in the background.
But most funny because how few companies buy ADs on Twitch you might just end up seeing the same 3 ADs in a loop for 20 minuts. As far as I can tell at least outside of the US twitch is sometimes even incapable to run a 3-5min AD break properly due to the lack of bought ADs...
All of you talking about how streamers just can't pick when to run an ad have no idea what you're talking about.
They can schedule a few 15 second ads and then run longer ads manually to fulfill their 50-50 revenue share / preroll exemption.
Streamers have to run a certain amount of ads per hour or they both lose a larger "share" of the ad revenue, and there is a preroll. Prerolls cause a huge impact in viewership so streamers don't want it.
The problem Twitch faces is that it now has multiple competitors: tiktok, youtube, and kick.
It's not just servers/engineers. Twitch has a lot of moderation issues and that requires a lot of labor. That's partly why the others are eating their lunch - little moderation.
I've been in streams with less than 100 viewers and seen hundreds of dollars in bits & gifted subs being spent in a single hype train. Are those really unprofitable for Twitch?
Bits are a little more complicated. Donators have to buy bits ahead of time and then donate them. 100 bits is worth $1 to a streamer. But 100 bits will cost between $1.18 and $1.26 depending on how many bits you buy at once. Buying a larger block means paying a little less. (Side note: Once the streamer has received the bits, they can't be taken back, even if the credit card charge that bought the bits is reversed due to a fraud claim)
If a streamer with <100 viewers was getting hundreds of dollars in a single hype train, then either that streamer is very lucky and has a rich viewer that doesn't mind throwing around money, or I'd suspect something fishy is going on. ie, bits being bought with stolen credit cards, or the whole thing is a money laundering scheme.
It would occur regularly to several different streamers I used to watch. Double digit level hype trains were the norm and according to the leaked earnings they were making well over 100K on twitch.
A typical streamer which can life from it but isn't getting rich (or even wealthy!) tends to stream 6+h streams at at least 3 days a week more likely 4-5. Which additional time costs for stuff like filling taxes preparing streams, updating software etc. it's not too rare for streamers to have a 50+ hour week, without getting rich or even wealthy from it. While some pop of and get wealthy or rich it's not the norm. Most do so because they love what they are doing and/or would have problems with other jobs.
I have seen multiple cases of small streamers using Twitch as a form a therapy to help them to overcome social awkwardness or some kinds of anxiety. Also some cases of depressive or otherwise sick people using it to have something like a job even through they are to sick to get any normal job even if they didn't need it for money (to avoid brain rot of being stuck at home and maybe some additional semi-social contacts).
Naturally there are exceptions e.g. of streamers "capturing some whales" and making quite good money with a fraction of the effort of the normal case, but in the end this are exceptions.
Through even on larger streams most gifts come from a relatively small number of people so there definitely are some outliers like you described but as far as I can tell they are the exception not the norm.
Amazone provides something like a "live streaming infrastructure service" which they sell to Twitch and others (including the competition like Kick).
For them buying Twitch was good as it allowed them to thoroughly test that service somewhat "in-house", have an initial customer for it to show what it can do etc.
But now that this is done for Amazone there is little value in Twitch, mainly:
- can it make profit (currently no)
- does it improve our image (surprisingly yes, a bit)
- does it allow us to sell more prime memberships (in the past for a short time yes, I don't think anymore)
- does it send bad signals if we shrink/close it now which could affect Amazone stock (somewhat, but if you slowly try to fix it show that you do and then if it doesn't work sell it probably no)
(parts in brackets are speculative)
Large streams are more expensive but those get the subs. Ad revenues they are also splitting but they play 3 minutes of ads that interrupts the entire content every 10 minutes.
Large steams do amortize cost while the bandwidth cost is somewhat scaling per viewer there are other cost which scale per used resolution and per region the stream is streamed to. So on a per-view bases large streams are often not the most expensive. But very small streams with viewers across continents have the highest per-view cost.
AD revenue is split but the main problem is Twitch ADs are not worth much and a bought way to little, often leading to no ADs playing at all for many (non US) regions.
>they play 3 minutes of ads that interrupts the entire content every 10 minutes.
They do not (typo?), it's depending on the streamers setup but ADs are normally more in the 3min per hour basis which is fine to be honest. There are sometimes some additional banner ads but they don't cover the content, don't "play" and are not that disruptive. And there is Twitch Turbo which disables all ADs but streamers still get the AD money. Through that isn't worth it's money for a lot of people.
It’s “unfair competition” for a company to use its own servers to host its own business?
Should Microsoft also not be allowed to host online Office on Azure?
You don’t think Netflix is paying rack rates for AWS do you?
and yes you can always negotiate rates but it has to be in some "reasonable boundaries" so Twitch still has to pay Amazone and Amazone can't just set the price to just the cost Amazone has, even less so below.
When you go into the internal “phone tool” if you work for Amazon, AWS, Twitch etc you still eventually get to the same CEO.
(Former AWS employer)
And when I went to my phone tool, he still reported to Bezos at first
Twitch giving money to Amazon is just a number in a computer somewhere.
Even if the government "forces" them to change those numbers on a computer, there is nothing stopping Amazon from just giving twitch more money to fund it, if they knew it were "profitable".
The real reason is that twitch buys AWS services at cost with zero profit to anyone, and even at those low prices it still can't make money.
Twitch is doomed.
Anyways, infrastructure costs is not as important as market share in the long run, bandwidth and transcoding costs will go down with time. If you build a platform where nobody has grounds to compete with you like Twitter, (Threads tried), you've got something really valuable - maybe not 44 billion worth but still.
The citation below isn’t entirely true, internal departments aren’t charged “retail” prices. But they are charged and if you have multiple accounts opened testing different releases of an open source “AWS Solution” in multiple regions that uses the then $5K a month Kendra service along with largish ElasticSearch, you will show up on the naughty list (ask me how I know)
I’m no longer an employee if AWS
https://www.lastweekinaws.com/blog/the-aws-service-i-hate-th...
> When internal game development teams use Isengard accounts, they must pay (via internal accounting) the same rates for AWS compute cycles that outside retail customers pay, according to people close to the teams
YouTube is break even and imagine how much content is uploaded and stored there per second, forever. Twitch VODs are deleted after 2 months. Most streamers don't even get any viewers. Those that get viewers get people paying real money on top of ad spam. The numbers don't really add up like how Amazon often pays $0 in tax.
My guess would be their ad spend is bad in comparison to the other networks (Google, Facebook, TikTok). Could be because their audience isn't worth as much, could be because the ad formats are bad, could be because they can't get advertisers. But unless they are serving ads from Google's network, my guess is they are 4th place at best.
As noted on other threads, their streaming infrastructure must be a burning dumpster fire of money. Live streaming is super hard since you can't edge cache it, and it requires actual hard computer engineering to make work. If a mere mortal company were to try to run a clone of Twitch on AWS, it would run out of money in days. It also likely uses the same hardware as other high-value products, such as AI.
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(I think the thread is too deep and preventing me from replying directly to child post)
I posted here[0] a link to a video with pretty good commentary, speculating on and critiquing their strategy.
To paraphrase it, they are not necessarily banking on operational costs being dwarfed by casino revenue in and of itself... but that Kick will yield exposure and drive more people to their gambling platform overall. He is also skeptical and fairly unconvinced that it'll be a slam dunk venture for them.
If I had to guess, I'd speculate they're doing encoding on their Graviton ARM CPUs: https://community.arm.com/arm-community-blogs/b/infrastructu...
for consumers they tend to overlap because they way to get a good encode is to buy a good graphics card which might be more expensive due to AI and before that crypto
through on server center there are special purpose encode PCIe cards I think, through the ARM CPUs might also be an option
as a side note because people mix it up all the time Twitch is owned by Amazone but a distinct legal entity which has to pay Amazone for any AWS/Server stuff they use in the same way as other customer
operating a reasonable reliable live streaming service is quite expensive and Twitch is not Amazone. Sure it's owned by it but it still has to buy all computation resources from Amazone, for similar prices then some of the competition like Kick (which deeply interwinded with gambling streams which are profitable but ethically and legally problematic and hence banned on Twitch)
and while they do take a cut this is only profitable if a streamer gets enough subs/bits etc.
but most streamers on twitch do not get that, but might still have people watching across two continents+. E.g. having less then 50 viewers but viewers across 2 continents with a stream earning less 1€ income (not profit) per-hour in average isn't that rare
So the "big streamers" would need to subvention the cost of Twitch being free for streamers, which isn't easy. That some people do use Twitch as a form of marketing platform to goat people on other platforms and then there earn money from then doesn't help (and given how little twitch does against that but often simply could I'm seriously wondering if there is some internal employee corruption scandal to be uncovered).
Then there is another issue Twitch has compared to YT, it ADs are worth way less. Actually often Twitch doesn't even get enough ADs bought out so that some people in some regions sometimes see no or hardly any ADs (no one bought any) or ADs repeat too often...
Lastly and maybe for some people surprisingly given how some tech channels love to blow up any small negative news about twitch it's trying to act "reasonable ethically", i.e. not "oh they are grate people ethically" but "they have limits on how evil they act which are more then the law requires" ethically. You can see this if you compare the usage of dark patterns and highly addictive feedback loops between Twitch and TickTock. The later maxes out everything they can wrt. dark patterns which have addictive effects (at least for vulnerable people) and obfuscate how much money you spend. While Twitch, well does not do so.
Oh and probably there was some mismanagement, not now but a few years ago.