Here's How Twitch Is Destroying Their Platform

Twitch has been on a steady decline for the past two years, and they have no idea how to fix it. They're potentially losing hundreds of millions of dollars per year, laying off hundreds of employees, banning some of their most important creators, implementing useless features, and are constantly proving how little they know or care about the live streaming community. Twitch has been the biggest live streaming platform for the better part of a decade, but there is some competition on the horizon. Although it wouldn't take much for YouTube to put Twitch out of their misery, it's very likely that their collapse will come from their own self-sabotage. First and foremost, Twitch's financial stability is confusing, and although they reported 2.8 billion dollars in revenue in 2022, it's unclear how much of that, if any, was profit. However, there are a lot of implications that suggest the company is struggling to be in the green. Twitch's four ways of making money are through subscribers who pay five dollars a month to get an ad-free experience as well as other small benefits, in-app purchases which include bits, a digital currency that users purchase to donate to streamers, partnerships with brands and sponsors, and of course, the number one, advertising. We don't know how many total paid subscribers there are on Twitch. I did find this metric from Stream Hatchet that says in April of 2021, Twitch had 8.7 million subscribers, where 43% of them were Amazon Prime subs. A Prime subscriber is someone who gets an ad-free experience for zero dollars since they already have an Amazon Prime membership because Amazon owns Twitch. Therefore, Twitch doesn't make any money on that sub. In fact, you could argue they're losing money since viewers are paying zero dollars and not getting ads, and Twitch has to pay creators one dollar and some change for that Prime sub. Anyways, this graph indicates that in the month of April, Twitch had 4.7 million paid subscribers times five dollars, which is 23.5 million times 12 months average, which would be about 282 million dollars in sub revenue in 2021. But Twitch on average receives between 30 and 50 percent of that money because for affiliate streamers, Twitch takes 50 percent or two dollars and fifty cents of the five dollar subscriber price, and for partners, they take thirty percent or one dollar fifty of the five dollars. So if we favor the high end of fifty percent, that would equal 141 million dollars in subscriber revenue that goes to Twitch. But if Stream Hatchet's estimation of Twitch only having 4.7 million paid subscribers per month is wrong and they actually have around 10 to 20 million paid subscribers per month, that would bring Twitch's cut between 300 and 600 million dollars per year. Some people argue that Twitch taking a 50% cut of sub revenue is just an act of greed because most of their money comes from advertising. Now, 141 to 600 million dollars is nothing to scoff at, but compared to 2.8 billion, I could see why people make the claims. However, it seems like Twitch needs this money to keep their business from failing. According to a blog post in November 2022, where Twitch President Dan Clancy, who is now the CEO, announced that creators who make over one hundred thousand dollars in sub revenue will no longer get their 70/30 split. It will go down to 50/50, and over time, all creators will split the sub revenue 50/50 with Twitch. Why? Well, because it's too expensive to run Twitch. Delivering high definition, low latency, always available live video to nearly every corner of the world is expensive. Using the published rates from Amazon's Web Services Interactive Video Service, or IVS, which is essentially Twitch video live video costs for a 100 CCU streamer who streams 200 hours a month are more than one thousand dollars per month. Now, what they said here is very misleading. If you want to start your own live stream platform, you can pay for Amazon IVS or basically Twitch's infrastructure. The problem with Dan's statement here is there is simply no way Amazon is charging Twitch the same rate that anyone else would be charged for using IVS. Why wouldn't Amazon do that? Well, again, because Amazon owns Twitch. Amazon would charge mere you one thousand dollars per month to deliver HD live video to 100 concurrent viewers at 200 hours a month, but they likely charge 2, which is at least 50 to 90 percent less than that. In fact, nobody has any real idea of how much it costs to run Twitch. Obviously, you have employee compensation with thousands of employees, but more importantly, billions of dollars per year in energy costs to maintain those servers and deliver perfect quality on-demand streaming all over the world at any given moment. And although we don't know those costs, we could pretty safely say that taking a higher percentage from their partners is not going to cover the expenses. Now, regarding how much Twitch makes from bits, it's unclear, but I'm sure most streamers can agree that bits donations are nowhere near as common as subscribers. It was reported that Twitch generated 185 million dollars from in-app purchases. I'm not sure if this includes subscribers and bits together or if it's just bits and other microtransactions like badges, gift cards, and loot cave. Either way, we are learning that at best Twitch is generating roughly 750 million dollars from subs and in-app purchases, or at worst 185 million dollars. Regarding the list of what the real numbers are, we know that without a doubt Twitch could never survive on just paid subscribers and in-app purchases, which means that likely the two plus billion dollars in revenue they generated in 2022 pretty much comes from advertising and brand partnerships. The problem with this is advertisements are destroying the viewer experience. Creators have a terrible revenue split with Twitch, which has led to a near 10% decrease in average viewership and watch time for the past two years. We all know how annoying ads can be, besides when I do them because today's video is sponsored by Aura. Have you ever Googled your name and seen yourself on one of those strange sites that has way too much information about you? It feels pretty weird. I'd rather have that stuff not available to just anyone who's looking for it. Data brokers are making so much money selling your information to robocallers and spammers. Luckily, Aura can find the data brokers that are sharing your information, and these brokers are legally required to remove your information if you ask them, but they make it very difficult to do so. That's where Aura comes in and submits opt-out requests on your behalf. You can try Aura for free for two weeks using my link aura.com/patrickcc. Aura also does so much more to protect you: antivirus, VPN, password manager, identity theft protection, credit monitoring, and much more. And the best part is you get everything at one affordable price. Let Aura protect you and keep your information safe online. You can let people continue to exploit you and profit off your private information, or you can go to aura.com/patrickcc to start your two-week free trial. Link in the description. Thanks, Aura. On an average Twitch stream, a viewer will get a minimum of three minutes of advertisements per hour. However, in late 2022, Twitch announced the rollout of the ads incentive program where they encourage streamers to run 8 to 10 minutes of ads per hour. Multiple minutes of ads being displayed consecutively will result in viewers either leaving a platform or clicking off to another streamer. The only problem is every time you click on a new stream, you will get hit with another non-skippable 30-second ad. There is no way to skip the ads. There is no way to escape the ads, and there is no way to rewind the stream and see what you just missed. This has led to a near 10 percent decrease in hours watched and average viewers from 2021 to 2022. Both of those metrics are also down in 2023 by 5%. Simply put, there are too many ads on Twitch. But that's a good thing for the company, right? Well, not exactly. Twitch does not have an im...

implementing useless features and are constantly proving how little they know or care about the live streaming Community twitch has been the biggest live streaming platform for the better part of a decade but there is some competition on the horizon although it

wouldn't take much for YouTube to put twitch out of their misery it's very likely that their collapse will come from their own self-sabotage first and foremost twitch's Financial stability is confusing and although they reported 2.8 billion dollars in Revenue in 2022 it's

unclear how much of that if any was profit however there are a lot of implications that suggest the company is struggling to be in the green twitch's four ways of making money are through subscribers who pay five dollars a month

to get an ad-free experience as well as other small benefits in-app purchases which include bits a digital currency that users purchase to donate to streamers Partnerships with Brands and sponsors and of course the number one advertising we don't know how many total

paid subscribers there are on Twitch I did find this metric from stream Hatchet that says in April of 2021 twitch had 8.7 million subscribers where 43 of them were Amazon Prime Subs a prime subscriber is someone who gets an ad

free experience for zero dollars since they already have an Amazon Prime membership because Amazon owns twitch therefore twitch doesn't make any money on that sub in fact you could argue they're losing money since viewers are paying zero dollars and not getting ads

and twitch has to pay creators one dollars and some change for that Prime sub anyways this graph indicates that in the month of April twitch had 4.7 million paid subscribers times five dollars which is 23.5 million times 12

months average which would be about 282 million dollars in sub Revenue in 2021 but twitch on average receives between 30 and 50 percent of that money because for affiliate streamers twitch takes 50 percent or or two dollars and fifty

cents of the five dollar subscriber price and for partners they take thirty percent or one dollar fifty of the five dollars so if we favor the high end of fifty percent that would equal 141 million dollars in subscriber Revenue

that goes to twitch but if stream hatchets estimation of twitch only having 4.7 million paid subscribers per month is wrong and they actually have around 10 to 20 million paid subscribers per month that would bring twitch's cut between 300 and 600 million dollars per

year some people argue that twitch taking a 50 cut of sub revenue is just an act of greed because most of their money comes from advertising now 141 to 600 million dollars is nothing to scoff at but compared to 2.8 billion I could

see why people make the claims however it seems like twitch needs this money to keep their business from failing according to a blog post in November 2022 where twitch President Dan Clancy who is now the CEO announced that

creators who make over one hundred thousand dollars in sub Revenue will no longer get their 70 30 split it will go down to 50 50 and over time all creators will split the sub Revenue 50 50 with twitch why well because it's too

expensive to run twitch delivering high definition low latency always available live video to nearly every corner of the world is expensive using the published rates from Amazon's web services interactive video service or IVs which is essentially twitch video live video

costs for a 100 CCU streamer who streams 200 hours a month are more than one thousand dollars per month now what they said here is very misleading if you want to start your own live stream platform you can pay for Amazon IVs or basically

twitch's infrastructure the problem with Dan's statement here is there is simply no way Amazon is charging twitch the same rate that anyone else would be charged for using IVs why wouldn't Amazon do that well again because Amazon owns twitch Amazon would charge mere you

one thousand dollars per month to deliver HD live video to 100 concurrent viewers at 200 hours a month but they likely charge 2 which at least 50 to 90 percent less than that in fact nobody has any real idea of how much it costs

to run twitch obviously you have employee compensation with thousands of employees but more importantly billions of dollars per year in energy costs to maintain those servers and deliver perfect quality on-demand streaming all over the world at any given moment and

although we don't know those costs we could pretty safely say that taking a higher percentage from their Partners is not going to cover the expenses now regarding how much twitch makes from bits it's unclear but I'm sure most

streamers can agree that bits donations are nowhere near as common as subscribers it was reported that twitch generated 185 million dollars from in-app purchases I'm not sure if this includes subscribers and bits together or if it's just bits and other micro

transactions like badges gift cards and loot cave either way we are learning that at best which is generating roughly 750 million dollars from subs and in-app purchases or at worst 185 million dollars regarding list of what the real

numbers are we know that without a doubt twitch could never survive on just paid subscribers and in-app purchases which means that likely the two plus billion dollars in Revenue they generated in 2022 pretty much it comes from advertising and brand Partnerships the

problem with this is advertisements are destroying the viewer experience creators have a terrible Revenue split with twitch which has led to a near 10 decrease in average viewership and watch time for the past two years we all know

how annoying ads can be besides when I do them because today's video is sponsored by Aura have you ever Googled your name and seen yourself on one of those strange sites that has way too much information about you it feels

pretty weird I'd rather have that stuff not available to just anyone who's looking for it data Brokers are making so much money selling your information to robocallers and spammers luckily Aura can find the data Brokers that are sharing your information and these

Brokers are legally required to remove your information if you ask them but they make it very difficult to do so that's where Aura comes in and submits opt out requests on your behalf you can try Aura for free for two weeks using my

link aura.com patrickcc Aura also does so much more to protect you anti-virus VPN password manager Identity Theft Protection credit monitoring and much more and the best part is you get everything at one affordable price let Aura protect you and keep your

information safe online you can let people continue to exploit you and profit off your private information or you can go to aura.com patrickcc to start your two week free trial link in the description thanks Aura on an average twitch stream a viewer will get

a minimum of three minutes of advertisements per hour however in late 2022 twitch announced the rollout of the ads incentive program where they encourage streamers to run 8 to 10 minutes of ads per hour multiple minutes of ads being displayed consecutively

will result in viewers either leaving a platform or clicking off to another streamer the only problem is every time you click on a new stream you will get hit with another non-skippable 30 second ad there is no way to skip the ads there

is no way to escape the ads and there is no way to rewind the stream and see what you just missed this has led to a near 10 percent decrease in hours watched and average viewers from 2021 to 2022. both

of those metrics are also down in 2023 by 5 simply put there are too many ads on Twitch but that's a good thing for the company right well not exactly twitch does not have an immense amount of data on who their viewers are because

there isn't a whole lot to do on the platform to track it think about YouTube Tick Tock and Instagram in just a few minutes you will be exposed to a large variety of different niches and you are actively pressing the like button or

stopping to engage with the content the amount of specific information you give about yourself without realizing is just data that gets organized and used to sell targeted ads to you because of my Instagram habits the app knows that I

like men's streetwear and accessories skateboarding modern furniture rap music and golf so they can send me ads related to those things all twitch knows about me is that I watch I'm Dante a lot and he's my favorite streamer so they could

maybe guess what I might be interested in based on what they think I'm Dante's viewers like and because of this most advertisers don't feel comfortable using twitch because they don't know if they are truly selling to their target

audience are you drinking water when you advertise on YouTube a brand like Pampers can Target as specific as 28 year old married women that live in the eastern United States and are pregnant or just had their first child and

YouTube can run ads so that mostly viewers who fit in that category will see those ads if Pampers went to Twitch with that target audience in mind they would simply not know where to run the ads the only thing that twitch knows is

that Their audience is mostly men ages 13 to 35 who like video games this eliminates a huge chunk of potential Revenue because only a small amount of Brands want to advertise to that audience energy drink Brands unhealthy snack Brands car brands and other men's

lifestyle Brands love advertising on Twitch which leads to interesting sponsorships like QT Cinderella baking a cake on a live stream people with a manscaped partnership that says we save balls on the screen to make things worse for advertisers every deal has to be a

long conversation with the ad sales team at twitch back and forth emails phone calls contracts a process that takes forever but any brand or individual can simply go to YouTube click Start advertising and run a campaign without ever talking to anyone twitch will never

be a real competitor if they don't figure out a way to get more reliable data on their users and create a programmatic ad system so Brands can sell to Their audience without relying on communication with a twitch employee

and because of their inability to produce substantial Revenue they hired internal leadership who would shift the focus away from creators and towards driving profits the senior vice president of global creators Constance Knight created a new initiative cut costs cut costs cut costs every decision

over the course of her tenure was fully based on how it was going to increase company profits which isn't necessarily her position since she is the head of global creators therefore for the needs of creators were constantly being

ignored in one specific example Knight said that burnout was not a valid reason for creators to not meet contractual obligations if you don't know most of twitch's top creators have contracts directly with the platform where they are being paid essentially a salary or

hourly rate to stream exclusively on the platform these contracts require them to stream anywhere from 70 to 100 hours per month which is roughly three hours per day or four hours per day if you want the weekends off but the VP was not

letting creators use burnout or basically them being unmotivated to stream as a valid excuse to not meet their monthly stream requirements which led to which employees feeling like the company was losing its way 12 to which employees had gone to HR or logged

complaints with their superiors overnight five had left the company citing night as a reason now some of you watching could never be convinced that sitting at a computer and playing video games could become a stressful or an annoying job in any way shape or form

but at the end of the day it's still is a job and anyone can burn out from any job that they do every single day for years another previous twitch employee took to YouTube to State how they feel

about the company twitch doesn't care about creators twitch cares about looking like they care about creators everything twitch has done for the last four years has been with the goal of feeling like they understand and Care although this could seem like

an employee who is just upset about being fired twitch has shown time and time again that no matter how large of a Creator you are they will take you down even at your highest moment Kai sanat a Creator who only just started streaming

in February of 2021 dominated Twitch in all of 2022. he reached the very rare Milestone of 100 000 subscribers which made him the number one most subscribed Creator at that time this prompted him to do a subathon which was a 24 7 28 day

long non-stop stream in February 2023 to try and break the record for earning the most subscribers on Twitch in a single month that record was previously held by Ludwig at 283 000. not only did Kai break it he demolished it peaking at 306

621 all-time subscribers it was reported that he earned twitch 10 million dollars while Kai only received received a two million dollar payout these numbers were false and Kai did not appreciate the narrative twitch made 15 to 20 million

dollars on kaisanet and Kai only brought about two million back to the to the to the bro where y'all getting these numbers from where are these numbers coming from because now it's a narrative that I'm just a black man who's gonna use for a

million and millions and millions of dollars Kai breaking the sub record was huge news covered by Publications like the BBC and Bloomberg and most of us would assume that twitch would do anything to boost Kai up after all he

made history on their platform at the very least they would try to use this amazing moment to show the world what wonderful opportunities there are for creators on Twitch they could squeeze out more press with Kai and do campaigns

to get more people or Brands interested in live streaming but no instead they sent him a 100 pair of sneakers and banned him from their platform congratulations Kai on your huge accomplishment we are so proud of you Laura Anna and all of your friends at

twitch unfortunately there was no contract in that package twitch did not see enough value in Kai to offer him a streaming contract or they were making a very strategic business move twitch is very top-heavy meaning the top creators are

making all of the money only five percent of twitch streamers made over one thousand dollars in 2021 and 50 of all of their revenue comes from one percent of their creators Kai became a one percenter without getting an

exclusive contract which means twitch is profiting immensely off him it seems like they are not giving him a paid contract because they don't think he will leave his largest audience and Main Financial vehicles on Twitch and if it

was up to them they wouldn't give streamers contracts to begin with they want to get to a point where they aren't as reliant on the top one percent of creators so if someone leaves the platform they will be just fine YouTube

has 600 creators with over 10 million subscribers if 20 of those people stopped creating YouTube wouldn't be hurting financially eventually those creators will be replaced but twitch one percenters can't be replaced as quick quickly or as easily maybe Kai is a

transitional point for twitch as a company to see if they can keep one percent Talent without paying them additional money just a few short weeks after they sent him the sneakers kaisana announced he was banned from the platform on April 17th how could they

possibly ban the number one Creator on the site nobody knew the reason why but it prompted support from people like Kyrie Irving and Nicki Minaj we later found out that twitch told Kai it was from a GTA clip where he promoted

simulated sexual activity this was the clip come on God my boss he pretended like he was receiving services from a fake woman in a video game meanwhile there's a ton of real borderline sexual activity on that website let alone simulated twitch is

just reminding him that he no matter how big he is will not be able to break the rules and everyone knows twitch's terms of service are extremely unclear in 2019 Brazilian twitch streamer Gabriel Baptista received a suspension because

he showed a Pink Floyd poster during his broadcast Faria was banned for wearing gym clothes that twitch claimed looked like lingerie deller was banned for smashing a keyboard over his head and Dr disrespect was banned for her while they

never told him why sadly Kai's ban is just one of an extremely long list of incredibly Stupid Bands That twitch has given out and will continue to in the future so with twitch continuously making the wrong decisions when it comes

to profits employees and creators is competition a real threat to their company recently the live streaming platform Kik has made some noise after their 30 million Dollar Plus deal where they exclusively acquired Aiden Ross kick works and looks exactly almost like

twitch the main difference is that they have a much more lenient terms of service streamers can gamble say and do just about anything they want without getting banned and the biggest thing is that they are offering creators a 95 cut

of their subscriber Revenue Jared FPS a kick streamer highlighted his kick earnings at three thousand eight hundred dollars for 800 subscribers which would be about two thousand dollars on Twitch however I don't think this is going to be enough to really compete with twitch

think about all of the problems I highlighted in this video Kik is going to have to deal with all of those same problems but more importantly with advertisers they will be targeting the same niche as twitch but with less

censorship and more risque content advertisers will feel even less comfortable than they already do with twitch but the biggest problem is Kik is built on Amazon IBS remember when twitch said it was too expensive to run twitch on IBS well Kik uses this same

infrastructure the difference is Kik is likely paying at least 20 to 50 percent more than Twitches to keep their business operating so in a way no matter how successful kick gets they will be paying Millions if not billions to

Amazon who could use that money to fund twitch now YouTube gaming or their live streaming sector could very well be a threat the worst part about YouTube is that the live streaming experience is just not as good the chat is chaotic and

hard to read you can't look at chat logs which makes it really hard to moderate The Raid feature is terrible the discovery page for live streamers actually looks like they don't update it and they lack many of the small features

that make Twitch streaming more Dynamic and more fun yet even with all of those downsides YouTube still holds nearly 15 market share in the live streaming space so why is YouTube a threat it's very simple YouTube has 2.5 billion monthly

active users compared to twitch's 140 million YouTube has a strong and reliable ad Revenue system which generated 29 billion dollars last year plus they are offering 70 30 splits for streamers and if you build a following up as a streamer on YouTube you now have

a whole YouTube channel that you can post regular videos on you just built yourself two assets at one time most twitch streamers have to post clips of their streams on YouTube in order to grow and even still the translation is

not that great and they end up being more popular on YouTube If YouTube just got their live streaming page to operate exactly like twitch or Kik which wouldn't really be that hard for them it wouldn't make any sense for small

streamers to use twitch one percent streamers like Hassan and xqc wouldn't immediately jump ship or maybe never because they already have a huge following at the same time everybody has a price nobody thought Ludwig would switch platforms but he did so why

hasn't YouTube tried to take over especially since I claim it'll be so easy for them maybe they just don't see live streaming as a worthwhile business investment think about everything I mentioned in this video all the hurdles all the expenses all the bands

moderation discoverability issues Creator contracts Advertiser uncertainty Maybe YouTube thinks that live streaming will never be as profitable as video on demand film Sports entertainment and music streaming maybe live streaming will always be considered a niche sub-genre of the entertainment industry

until YouTube sees a bar packed full of people paying a 10 cover to watch Hassan debate Aiden Ross or Kai sanat and 21 Savage react to Drake memes they probably won't even bother so what should twitch do well they definitely

need to figure out a middle ground with ads they need advertisers to pay the bills and we as viewers understand that maybe a feature could be implemented that allows viewers to skip an ad or two just in case they pop up at a crucial

time in the Stream maybe even a feature that allows viewers to watch ads for a reward or uninterrupted ad time when there's some down time in somebody's stream kind of like how mobile games will allow you to watch an ad for a

reward or you could exchange personal survey information for Less ads it's invasive but hey they're gonna try to do that anyway and after they improve their ad system just keep the 70 30 Revenue split with all creators big or small

most platforms provide a better split than that so that's the least they can do also more clarity and consistency when it comes to streamer bands seems like a very fair ask just tell people why they were banned in detail time

stamp it provide a clip every single time someone is banned it should be the same process most importantly they need to improve discoverability for small slash medium-sized creators twitch streamers relying on YouTube or Tick Tock to gain a following is absolutely

ludicrous twitch is way too reliant on the one percenters and they're way too reliant on other platforms ultimately I want to see twitch win and the streaming Community wants to see them win as well I think live streamers are incredibly

underrated in terms of their entertainment value and ability to hold an audience for hours on end but if they don't make these critical improvements and YouTube Just decides to invest a billion dollars into making YouTube gaming a fierce competitor I think

twitch could be on the verge of going out of business five to ten years down the line