Topline: While Amazon’s Twitch dominates the live-streaming landscape, a new report from The Information citing people familiar with company financials says it only translated into a modest $230 million in ad revenue for 2018 and a midyear annual projection of $300 million for 2019.
- According to the report, Twitch was hoping to see ad revenues between $500 million-$600 million in 2019, with the service eventually hitting $1 billion.
- Partnered streamers on Twitch share revenue from commercials, with the option of running ads at will with the push of a button during streams, but the majority of earnings for top streamers comes from premium subscription revenue that’s shared with Twitch.
- The same is reportedly true for Twitch, which is now making more off “commerce” like subscriptions; along with its ad revenue, the company is hoping to hit $1 billion in 2020.
- However, given the top streamers generally get the majority cut from subscriptions, Twitch sees a better profit margin on ads, according to The Information.
- YouTube, in comparison, is thought to bring in billions off ad revenue alone, and according to Laura Martin, an analyst at Needham & Company, the service as a stand-alone business could be worth up to $300 billion after Google acquired it in 2006 for $1.65 billion.
- Part of Twitch’s strategy is expanding beyond its gaming roots, with its variety “Just Chatting” category rising 42% to 651 million in total hours watched in 2019, ranking behind only League of Legends and Fortnite, according to analyst firm StreamElements.
- Twitch remains far away the leader in streaming with 73% of the market share, according to StreamElements, but it’s being chipped away by YouTube (21%), Mixer (3%) and Facebook (3%), all of which have signed major streamers away from Twitch.
Key Background: Top gamer Tyler “Ninja” Blevins set off a bidding war late last summer when he signed an exclusive streaming deal with Microsoft’s Twitch competitor, Mixer. Facebook, YouTube and startup Caffeine have since signed exclusive streaming deals with former Twitch stars. The moves have just slightly ate at Twitch’s substantial lead in the market, but the long-term impact could be substantial. Regardless, YouTube has a distinct advantage over all other streaming platforms.
No matter the content creator, after they’ve finished streaming for hours on end, they’ll generally make 10-20 minute highlight videos to upload to YouTube.
Big Number: $970 million. That’s what Amazon paid for Twitch in 2014.
Further Reading: Take a look at the major streamer acquisitions that took place late last year.
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Source: Report: Amazon’s Twitch Not Meeting Ad Revenue Expectations