Twitch may just be Amazon’s best-kept secret. Acquired in a 2014 bidding war with Google for $1 billion in cash, the gaming platform, and the social network continues to break its own high scores. Four years after that acquisition and just seven after its initial launch, Twitch boasts a valuation of about US$3.79 billion.

Twitch viewers live-streamed more than 6.3 billion hours in Q1 2021, or more than 72% of all live hours watched, besting YouTube Live, Facebook Gaming, according to recently published reports.

Streaming the eSports Traffic

What has enabled the streaming site to capture and grow its audience despite rising competition comes down to a simple sentiment, encapsulated in a report from research firm SuperData: “While the ‘Why would anyone want to watch someone else play video games?’ sentiment continues to exist among those behind the curve, the smartest publishers, advertisers, and brands are recognizing that their consumers are now watching videos of people playing games.”

Largely ignored by advertisers and mainstream media networks before 2014, online gamers, spectators, and entertainers have long-awaited a platform for hosting and streaming content. Launched in August 2015, Google’s “Youtube Gaming” has since delivered on that need, but Twitch was first to the punch.

Key Takeaways

  • Twitch is a live streaming video platform and community for gamers and fans alike; it was bought by Amazon in 2014.
  • It boasts 9.1 million monthly unique creators streamers and 2.9 million average concurrent streamers as of Aug 2021.
  • Much like YouTube, Twitch makes money from advertisements, which it integrates into its streams; it also makes money from subscriptions.
  • Twitch also makes money through its two subscription models, the Amazon-affiliated Twitch Prime, as well as Twitch Turbo.
  • Twitch also earns a cut of the site's in-app currency called "Bits;" viewers buy Bits to fund live shout-outs to streamers they like.

What Is Twitch?

For the baby boomers and late-blooming millennials in the room, Twitch is a platform that allows gamers to be broadcasters, viewers, and participants in online gaming communities. Users can live-stream their gameplay, watch esports tournaments remotely, and cheer on their favorite competitive players.

More than just a website for watching and hosting live streams, Twitch is a social community of gamers. To some extent, this is a result of the platform itself. Unlike in professional sports, spectators on Twitch can connect directly with their favorite streamers, competitive players, and one another by commenting in real-time on Twitch Chat. In the course of a stream, viewers might chat with one another, ask instructional questions, and engage with streamers directly.

As of 2020, there was an average of 26.5 million visitors going to Twitch daily with 6.9 million unique streamers each month, in addition to 2.1 million average concurrent viewers.

How Does Twitch Make Money?

Not unlike Google’s Youtube, Twitch is a free streaming service fueled primarily by subscriptions and advertisements. However, backed by parent company Amazon, Twitch has experimented with and expanded its business model since 2014, defying precedent and forcing competitors to respond.

9.1 million

The number of unique creators streaming on Twitch per month, on average, as of August 2021.

Twitch Prime Subscriptions

If Twitch is Amazon’s best-kept secret, second place goes to “Twitch Prime.” While this membership normally runs at $12.99/month, Twitch’s parent company integrated this membership with their retail website in September of 2016, so that Amazon Prime members can subscribe to Twitch Prime for free.

“Twitch Turbo” is the second of the streaming website’s subscription services. The $8.99/month membership makes the game viewing experience smoother by cutting down advertisements, increasing video storage, and offering exclusive chat emoticons and colors.

In-App Purchases, Called “Bits”

In addition to cheering streamers on from Twitch Chat, spectators can also give live shout-outs to their favorite streamers using an in-app currency called “Bits.” Viewers can buy Bits starting at $1.40 for 100, making the exchange rate about 1.4 cents to 1 Bit. “Cheering Bits” on Twitch amounts to animated chat emotes. Typing “Cheer1” into Twitch Chat will produce an animated grey triangle and cost you 1.4 cents. “Cheer100” creates a dancing purple diamond worth $1.40. Users can cheer any amount they want up to “Cheer10000” ($140 USD), and the corresponding emotes get larger and more colorful.

One cent of each bit is donated to the streamer, leaving Twitch with roughly 70%.

Leveraging Amazon and the NFL

Twitch recently announced that it would be expanding its live streaming content beyond video games to include television shows and even a partnership with the NFL.

Twitch announced recently that viewers would be able to watch 11 National Football League games during the 2020 seasons, thanks to Amazon’s renewed streaming deal for Thursday-night games with the NFL. While the broadcast of NFL football on Twitch is a byproduct of Amazon’s ownership, the availability of professional broadcasts is a big win for Twitch — in part because Twitch viewers do not need to be paid subscribers to watch the games.

Live Stream Market Competition

Amazon’s most notable competition comes from tech giant Google. Youtube Gaming is a Google project and a more direct response to Twitch. Launched in August 2015, after Google failed to acquire Twitch in a bidding war with Amazon, the video game streaming arm of Youtube curates and recommends the live video for users.