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Twitch & YouTube: Amazon and Google fight over gamers, but the former has the better business model
The battle for the increasingly lucrative media format of gaming livestreaming is warming up. Enormously popular with millennials and generation Z, gaming livestreams have gone from a niche genre to the mainstream with the industry’s biggest stars taking millions of dollar a year and featuring in mainstream media. The king of this domain has for some time been Twitch, a gaming specific livestream platform that can host clips and videos but whose primary focus is nurturing its community of content creators and viewer base. YouTube has stepped into this arena however with its YouTube gaming platform and many expect this to be a significant challenger to Twitch and it is growing well overall. But despite this, Twitch and Amazon have the better business model and Twitch is going from strength to strength, with its recent round of popular streamers breaking records in the industry. Over the long term it remains to be seen how YouTube will progress in this area, but Twitch is proving to be an excellent acquisition for Amazon, feeding viewers into its retail channels.
YouTube gaming is the livestreaming rival to the ever popular Twitch, with the parent companies being Google and Amazon respectively, it has been billed as being quite a fight between the two giant companies as they compete for this new media area. Currently, Twitch has the head start and so has a much more numerous viewer base and broader community of streamers. However, many thought that YouTube’s dominance of the video service space would give it a huge and well established platform with which to catch up to and surpass Twitch.
Twitch has a much larger concurrent streamer base and as such competition is very high on the format. The potential prizes are very high for streamers and so competition is causing streamers to innovate in order to build their subscriber bases, followers and viewers. All of these elements are crucial for streamers to make money through the service and indeed for twitch itself which retains a portion of the subscriber fee itself. Subscribers are the key to the Twitch business model because they encourage the content creators and attract new streamers. Streamers can have secure monthly revenue streams and this encourages streamers to stick with the service and to find ways to attract more watchers and potential new subscribers. The potential prize pot is extremely large and the current most popular streamer earns over $600,000 from their subscribers alone.
As games rise and fall so do the streamers that are synonymous with a particular game’s content in the livestreaming sector. Currently a game type called Battle Royale is dominating the numbers and the rise of a game in that particular genre called Fortnite has been stratospheric. This has led to a new wave of popularity for the streamers of content from that game and the most recent riser is a streamer called Ninja. This particular wave has broken all manner of Twitch records, but the competitive atmosphere between streamers means that these content creators cannot rest on their laurels and even during the height of Ninja’s success new innovations were devised.
Twitch from the beginning has been incorporated into the Amazon business model too and Twitch content creators are effectively incentivized to push Amazon Prime to their viewership. Subscribers to Amazon Prime get a free Twitch subscription to any channel on the platform and this subscription does not renew meaning that each month Twitch viewers have to re-subscribe to their preferred channel. Twitch content creators get paid from these subscriptions in the same way as normal subscriptions and so the outcome is that these influential and popular creators regularly encourage their viewers to use their Prime accounts to subscribe to their channel, effectively publicizing Amazon Prime through Twitch to millions of viewers.
To read more please visit marketline.com for our full report