Renowned for its ease of use and relatively lag-free video quality, Twitch.tv is the current undisputed king of streaming platforms for video gamers. In January 2018, the site had an average 962,000 total viewers at any given moment across its hosted broadcasts. While the majority of its content is users streaming video game content from home, Twitch also features major esports tournaments, video blogging, and music-themed streams. Earlier this year, the site announced that it had reached 2 million monthly broadcasters and a stable viewership of 15 million users per day. Today, Twitch.tv is the largest video game streaming service in the US and with scant competition, although several would-be usurpers have attempted to challenge its dominance.

Twitch was established in 2011 when general-interest streaming platform Justin.tv branched out into the gaming field. The popularity of its gaming service soon greatly surpassed that of the parent site, which renamed itself to Twitch Interactive in 2014 and realigned its business to capitalize on its burgeoning new market. Twitch was designed to broadcast live gaming footage and esports tournaments, filling a gap in the video streaming market. Emmet Shear, CTO of Justin.tv was a fan of the StarCraft franchise, and his insight into the competitive gaming scene helped Twitch prosper where very few other services could achieve profitability.

At the time of the Twitch’s inauguration, streaming video game content was a costly and arduous process. Content creators had to make significant investments into specialized software and capture cards before manually uploading their footage to an online hosting service. The advent of Twitch enabled millions of users to broadcast from their home computer with minimal set up and, most importantly, it could be done with little to no latency issues. In October of 2012, little more than a year after the site’s launch, the company reported it had acquired over 20 million monthly users, a number which would more than double to 45 million in August of the following year. In addition to becoming a major player in the gaming industry, Twitch was now the fourth largest source of internet traffic during peak times.

“When it comes to the broadcast of big events, they have a stranglehold on the market,” said Rod Breslau, senior esports editor for Gamespot in 2013. “At this point folks just refer to them as the ESPN of esports.”

It was at this time that the first potential threat to Twitch arrived on the scene. Hitbox.tv launched in October 2013 with a $4 million investment from SeedInvest, Wargaming, and North Base Media. The aim of the site was to create a superior gaming live-stream platform, increase interactivity with viewers, and reduce latency in video content. The site even secured exclusive deals with Electronic Sports League (ESL), Wargaming, and Dreamhack, cornering major esports events that had previously partnered only with Twitch.

However, Twitch was prepared to make its next major moves. Around the same time that Hitbox launched, Twitch announced that it had raised $20 million in funding from Thrive Capital and Grand Theft Auto publisher Take-Two Interactive. The company planned to use the new capital to build the infrastructure to live stream tournaments in Europe and Asia. Not long thereafter, the now well-established site drew in masses of new users through a viral internet sensation called ‘Twitch Plays Pokemon’. In 2014, millions of Twitch fans came together to play through the classic GameBoy game, Pokemon Red. Using Twitch’s chat functionality, each user could type out a single input which would control the virtual console, a feat that was unique for its time and immediately brought a lot of new attention to the streaming platform. On February 17, just five days after the experience began, the stream attracted over 6.5 million views in a single day. Twitch Plays Pokemon averaged around 65,000 concurrent viewers at any given moment, with around ten percent of users actively participating in gameplay. The huge influx of new users into the already popular site cemented Twitch’s reputation as a titan of the gaming industry that it maintains to this today.

Later that year, Twitch announced that it was to be the official streaming site for E3, the huge video game trade event. In the years since, Twitch has continued to host the gaming ceremony and tournaments that take place at the event with great success. Around this time, leaks revealed that Google was in talks to acquire Twitch for $1 billion, but the deal fell apart just months afterwards. Although the reason for the fallout was never officially made public, reports indicated that Google and Twitch could not agree upon a breakup fee in the event that the acquisition failed. With Google also owning YouTube, one of Twitch’s largest competitors, some believe the threat of an antitrust suit might have been the cause for Google’s backing out of the deal. However, the next major courtship proved to be successful. In August 2014, Amazon announced that it would acquire the streaming platform for $970 million.

Now backed by one of the world’s largest corporations and owner of the largest cloud infrastructure in the world, Twitch had access to resources far in excess of any other streaming service, placing it leaps and bounds ahead of its nearest competitor. Google was not about to give up on its bid to capture the video game streaming market, however. After its failed acquisition of Twitch, Google went on to establish a similar product and what anyone would consider major serious competitive threat: YouTube Live.

YouTube Live is an add-on service to YouTube’s standard package and has attracted millions of viewers since its launch in May 2013. Live-streaming on YouTube can be done from any mobile device, provided that the user has obtained over 100 subscribers to their channel. The platform has the added advantage of being able to host 4K video at 60FPS as well as offering support to 360 degree video footage. In an effort to compete with Twitch, YouTube launched a video game-themed division of its Live service in 2015. In February 2017, Google’s popular video-hosting site added a new feature called SuperChat which allows viewers to donate monetary amounts from $1 to $500 in order to highlight their comment in the accompanying online chat.

The results of Google’s attempted coup soon became apparent. According to Statista, YouTube Gaming Live hosted an average of 271,000 concurrent viewers from Q2 2017 to Q1 2018. Over the same period, Twitch boasted 953,000 concurrent viewers. Not only was this number over three times larger than that of YouTube, but unlike YouTube, it represented steady growth over the previous year. As of mid-2018, YouTube’s streaming service still offers little in the way of competition or threat to Twitch, and the site is still primarily used for its video hosting services, the sector in which it corners the market.

Twitch’s other major competitor would soon fall by the wayside. In January of 2017, Hitbox.tv was acquired and merged with the floundering streaming service Azubu to form a new site, Smashcast.tv. At the time of the site’s rebranding, it was attracting an average 6 million viewers each month, well below Twtich’s metrics. Moreover, the site was now subject to some controversy, as Azubu’s previous management allegedly being unable to pay out winnings for several esports events. With these developments, Hitbox was now longer a threat to Twitch, which continued to go from strength to strength.

Amazon’s support also enabled Twitch to offer additional features and services to its users, including access to free content each month to subscribers of the premium Twitch Prime service. In early 2016, Amazon also launched Lumberyard, which allows users to easily create their own games with built-in Twitch integration, so allowing gamers to connect to the site in an increasingly-streamlined manner.

Twitch’s ability to lock in key partnerships was again proven in 2017, when Twitch obtained the exclusive rights to its newly-formed Overwatch League. Blizzard rewards fans who view the game’s esports tournaments through a Twitch stream with small amounts of a premium currency which can be redeemed in-game for special esports skins.

From the outset, Twitch differentiated itself from other streaming sites with its video quality and lag-free streams. While its integrated chat service quickly became rife with abuse, it succeeded in bringing fans together and fostering audience participation. Modern gaming consoles now play home to a Twitch.tv app which allows users with little or no technical expertise to broadcast their content to the world at the touch of a button. Technology aside, Twitch’s position in the gaming industry now makes it extremely resilient to competition. Twitch.tv is the go-to site for gamers seeking for competitive esports, and it has reached far-reaching renown as the host of the world’s largest gaming tournament, Dota 2’s annual The International. At the most recent event, Twitch shattered records by hosting almost 11 million concurrent viewers.

Twitch incentivizes broadcasting by providing a donation function which allows viewers to directly contribute to streamers that they enjoy. For some streamers this is their primary source of income, while for others it is a way to raise funds to travel to tournaments, for example. Some streamers perform charitable streams, donating contributions to a cause, and tournaments can be partly or fully-funded by audience members viewing from home.

While many gamers attempt to make broadcasting their full-time profession, streaming becomes a career to only the top percentile of streamers who hold the largest viewing audiences. These streamers make use of a range of revenue streams, of which subscription costs and user donations are among the most lucrative. Viewers pay a fee of $5 per month to subscribe to their favorite channels, and approximately half of this fee goes directly to the streamer. Most career streamers additionally make use of platform advertisements and sponsorships from eSports organizations. According to an article published on CNBC, professional Twitch streamers can make on average $3,000-5,000 per month playing 40 hours a week from the subscriptions alone.

Estimated earnings of the highest subscribed streamers run into hundreds of thousands of dollars per month. The most popular Twitch streamer, ‘Ninja’, has amassed over 3.5 million followers since he began streaming in 2011, and estimates place his subscriptions revenue at over $650,000 each month. As the number one streamer on Twitch, Ninja has also attracted major sponsorship deals that including Red Bull and Bud Light. While details of sponsorship deals are not disclosed, one might reasonably expect that they form a significantly percentage of Ninja’ s total income. Ninja’s stream-related income far exceeds that of the top-grossing eSports player of all time, Kuro “KuroKy” Takhasomi, who has won over $3.7 million playing Dota 2 at the top level. (For more information about esports players’ income, see our article, ‘How do Esports Pro Player Packages Compare to Professional Athletes?’.)

Twitch is deemed by many to hold a monopoly on the video game streaming market, but it does continue face earnest, if failed, attempts at competition from other organizations. Major League Gaming, an organization that has been around since the earliest days of esports, launched mlg.tv and, in 2015, convinced arguably the best Call of Duty player in the world, Nadeshot, to move from Twitch to their service. The esports veteran and captain of team OpTic Gaming began to stream exclusively on MLG’s site, but a year later claimed that the decision was his biggest regret, dealing a heavy blow to mlg.tv’s reputation.

Although alternative platforms and services are available to players and viewers, presently none are close to diminishing Twitch’s reputation as the dominant game-streaming site. Twitch’s positioning and resources place it at the forefront of organizers’ minds when selecting a platform for streaming esports events, and there are even cases of established YouTube streamers shifting to broadcasting live gameplay on Twitch. Such is the challenge that faces would-be competitors. Gaming and technology sectors are nothing if not dynamic, and the situation could change dramatically over the coming years, but for the present it would appear that there is as much chance of Twitch losing its position in the gaming industry as there is of ESPN losing its position in traditional sports.

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https://www.cnbc.com/2016/05/13/amazons-twitch-streamers-can-make-big-bucks.html

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https://en.wikipedia.org/wiki/Twitch.tv

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