Twitch isn’t profitable, what does that mean for its rivals?

  • The CEO of Twitch, Dan Clancy, has admitted that the leader in livestreaming is not profitable.
  • Twitch, owned by Amazon, recently cut 25 percent of its staff leading to concerns that the company may fold in the near future.
  • Competitors like Kick and YouTube Streaming will likely continue operating but they present problems of their own.

Now 12 years into operations with over 140 million monthly active users, streaming company Twitch is struggling to turn a profit. This is according to CEO Dan Clancy, who addressed concerns that the global leader in livestreaming could be shut down by its owner Amazon, on Thursday this week.

“I’ll be blunt, we aren’t profitable at this point,” he said to nearly 4 000 live viewers on the official Twitch account. “Amazon is being extremely supportive of Twitch and a big thing on being sustainable over time is that we don’t lose money. And that’s a big part of my job because that’s going to make sure we’re going to be here long term.”

Earlier this week, Twitch cut 25 percent of its staff, or around 500 employees, in one of the most high-profile tech job slashings so far this year. The cuts follow the departures of several top executives at the firm in a short span of time, a Bloomberg report details.

It is enormously expensive to run a large-scale website which supports 1.8 billion hours of live video content a month, despite Twitch’s reliance on Amazon’s infrastructure. In December last year, costs to operate the platform in South Korea became untenable, leading to Twitch closing in the Asian country without warning.

South Korea’s situation around its internet service providers is unique when compared to other major developed markets, which influenced the closure of Twitch livestreaming in the country. But with nearly 8 million creators on Twitch, many of which support themselves on the platform as their full-time employment, concerns that the platform may shut down altogether are warranted.

What the Twitch problem means for its rivals

Where does that leave both its massive streamer base and livestream viewers?

Twitch has two notable competitors, namely Kick and YouTube Streaming. Kick, backed by Australian online gambling firm, has a reported 20 million registered users and around 12 million creators as of 2023.

Like Twitch, Kick has also been unable to turn a profit. “Just like any startup, just like anyone trying to enter an extremely competitive industry, we understand that there is a cost you have to pay to enter,” said Kick CEO and co-owner Edward Craven as per Forbes.

He added that Kick will have to aggressively monetize between the 12 to 36 month mark in order to stay afloat. The company launched in 2022. A way that Craven and his team may be able to do this is through Kick’s gambling content.

Unlike Twitch, Kick allows livestreams of online gambling which provides fallow ground to advertisers interested in promoting their gambling firms and products. In fact, gambling is one of the most popular genres of streams on the platform, just below Just Chatting.

Kick has also been rapidly pursuing creators, many of whom have left Twitch seeking a better monetization split between creator and company. In 2023, Kick signed former Twitch streaming star xQc to a two-year $100 million deal. Major streamers like xQc bring a portion of their viewers with them, and if they so happen to stream some gambling for, well that’s just an added bonus.

The streamer also offers a better ratio than Twitch – now splitting profits with creators 50/50. Kick instead offers a 95/5 revenue split, in favour of the streamer.

Meanwhile, YouTube Streaming, with the backing of tech juggernaut Google and a massive swathe of ad revenue topping over $30 billion in 2023 has seen the total number of its streamers decline over the years probably due to how much more difficult it is to reach “partner” status on the site compared to Kick and Twitch.

In general, YouTube is also a less popular destination for those looking to enjoy streaming content but the company has tried in recent years to sweeten the deal for potential creators, even if it has essentially the same policies as Twitch.

The future of livestreaming

Where does that leave the live streaming space now? With Twitch in decline, Kick supported by its casino cash cow and YouTube seemingly not a favoured space for streamers, the race seems to favour the aggressive upstart in Kick.

But Kick has its own issues. The platform quickly accrued controversy. Its owners have said in the past that the platform only has two rules – no hate speech and no pornography. The latter rule can be bent, clearly, if one does a cursory look at the Kick Just Chatting page. The advertising of gambling itself also presents a challenge.

Gambling in the media, including advertising is prohibited and highly controlled in South Africa, for example, which could present an issue for local streamers on Kick. Other nations have similar restrictions.

If the future of live streaming lies in Kick, that future seems murky indeed.

[Image – Photo by ELLA DON on Unsplash]


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