By: Reed Morris
What are the Streaming Wars
Ever since the beginning of the COVID-19 pandemic, the on demand entertainment industry has been booming. With people spending more and more time at home, they have been starting to look for more ways to keep themselves busy and engaged with the outside world. We saw explosive growth in the TV and movie streaming industry, the gaming industry, and the live streaming industry. While I’ve already covered some big news in gaming and tv/movie entertainment, it’s high time we address the competitive and extremely valuable world of live streaming.
Over the past few years, there has been a huge race to see who will hold the crown as the best live streaming service. The first platform that really had live streaming figured out is a platform called Twitch. It allowed streamers to create their own live broadcast for viewers to watch and interact with. For a while, Twitch was a purely entertainment based platform, but over time the company implemented ways for streamers to monetize their work. This allowed them to put more time and effort into their content and for some of the more successful streamers, it allowed them to pursue this as a full time job. Because of the platform’s massive success, it was snatched up by Amazon in 2014, for just short of $1 Billion in cash.
In recent years however, other major companies have noticed the growth and success of live streaming. They’ve seen this growth and have decided to throw their hats into the ring. While many companies entered, not many were successful.
Facebook entered the competition in 2020 with the famously bad launch of ‘Facebook Gaming’. After a rocky start, Facebook had an understandably hard time pulling in audiences from other platforms and has essentially not grown at all since its initial launch. While the company’s viewership numbers are high, they are extremely inflated as they count any interaction with live streams and viewership is somewhat forced across their platforms.
Another competitor that crashed and burned even harder than Facebook was Microsoft’s ‘Mixer’. The company started around the same time as Facebook Gaming, and had many similar problems in regards to growth and viewership. Mixer famously sought out big names in streaming such as streamer Tyler ‘NInja’ Blevins. The world famous Fortnite streamer was signed to Mixer for upwards of $30 million in return for an exclusive 3 year contract. After his switch to Mixer, Blevins’ viewership dropped and Mixer made almost no money off of the 30 million dollar deal. Before the 3 year contract concluded, Microsoft completely shutdown any operations related to the Mixer platform.
The two platform’s that still stand are Twitch and YouTube Gaming. The war between the two platforms has been growing exponentially over the past year or two and is finally reaching its peak. The reason that Twitch is able to keep up and compete with a gargantuan company like YouTube (owned by Google) is because of the culture and community it has built around its service. There is close to a decade’s worth of culture and history that Twitch has that YouTube can’t mirror. The loyalty that Twitch has garnered from its users is almost unmatched on any other platform in the world. While Twitch has the community, YouTube has the money, and in recent months, have really been flexing their financial muscles.
Unsurprisingly, the most important aspect of the streaming industry to the platforms, is the cash flow. There are many ways on both YouTube and Twitch that users can subscribe to, or spend money on, the platforms to support their favorite streamers. While this is a great aspect of the space, the platforms that the streamers use usually take a good amount of the money spent. The most common and most important type of monetary splitting between platform and streamer is the ‘sub-split’. The percentage of every subscription cost that goes to the streamer vs the platform.
Twitch has been having a hard time keeping up with YouTube’s growing popularity, and so they have needed to find a better way to make money. As Amazon owns Twitch, there is a lot of wiggle room for Twitch to not make that much money, but at this point, it is just bleeding cash. The methods that Twitch has announced they are going to use to keep itself in business has caused a lot of controversy and backlash from the community surrounding the platform. While there were a lot of small changes that were detailed in their release, the most noticeable change is the extreme decrease in the sub-split for the creators.
For streamers contractually signed to the platform, they would usually be seeing something close to a 50% or 75% percent profit split, meaning that Twitch would only take in 50-25% of the revenue that any given signed streamer would receive. While this is still a lot of money that Twitch is taking out, streamers would still make a lot of money, enough for them to continue to use streaming as a full time job. The big change that Twitch has announced is that they are reducing sub-splits to somewhere around 20-45 percent. This is an extreme and terrifying change for many content creators.
The biggest thing here is the money. Streamers need to make their money somehow, and Twitch just might not be the place for that anymore. With YouTube keeping sub-splits in the 50-75% range, and signing on huge community names such as Ludwig Ahgren, Sykkuno, and Valkyrae, YouTube seems to be slowly coming out on top.
While the war has a lot more time left in it and neither side is giving up any time soon, this extremely valuable and influential conflict between obscenely large corporations doesn’t show any signs of stopping.