What happened to Twitch?

Amazon's live streaming platform was supposed to revolutionize video consumption

One of the great what-if’s in media and tech is, what would have happened in Google - not Amazon - had bought Twitch?

A decade ago, Google/YouTube and Amazon were in a battle to grab Twitch, a then red hot live streaming platform focused mostly on gaming, but with aspirations for much more. Amazon won the sweepstakes, shelling out nearly $1 billion to land the property, which promised to be forerunner for how young people will consume media in the coming decades.

Things are looking less clear at the moment. Just in the last few months:

• Amazon let go of 500 Twitch employees

• Twitch significantly cut down how much creators can make from the platform

People who closely observe the creator community are not bullish on Twitch’s near term prospects, or Amazon’s commitment to its growth.

I had former VidCon CEO Jim Louderback, who writes the excellent Inside the Creator Economy newsletter, on my podcast this week. He thinks Amazon is getting impatient with Twitch’s lack of profitability and apparent audience ceiling.

“I think what's going on at Twitch…is that Amazon has woken up, you know, obviously because Amazon bought them and they're saying, uh, this thing that we've had for a few years, maybe it's time for it to make money because it's never really made money,” Louderback said.

“They're losing a ton of money every year because of the expense of keeping the platform running and all the other things. So, unlike YouTube that makes a lot of money, and I assume TikTok does really well, Twitch just never really made it. And there are other options out there now. In YouTube leaning in, they're now doing twice as much game streaming as Twitch is.”

Still, you might think that Twitch would be able to make up for its bandwith costs by bringing in tons of ad revenue. After all, a young, hard-to-reach audience that has tons of disposable income to dedicate to gaming, leisure and entertainment would seem to be highly desirable for brands. Not to mention the fact that so much of Twitch’s consumption is live - at a time when few people watch anything live outside of sports.

Well, yes and no.

“With MrBeast,” Louderback said, you have a couple hundred million subscribers. “When you're live on Twitch, 10,000, 20,000, 30,000 [live viewers] is a really good number. That's great, but it's still, it's not a lot. It's not a big audience.”

Would things be different if Google had closed the deal a decade ago? Hard to say. It took forever for YouTube to become profitable, in part by figuring out what it had in its unique set of native creators. Streaming, gaming, influencers - the entire Twitch business would seem to super complementary to YouTube.

Meanwhile, Amazon’s ad business has positively exploded over the past decade, but that’s been almost entirely driven by its incredible pool of first. party data and attribution tracking. While Twitch would seemingly mesh with some of what Amazon has looked to build in live sports (Thursday Night Football, etc), you don’t hear about media buyers looking to shift linear TV money to Twitch. Indeed there’s probably a reason that we don’t hear the company bring up Twitch on its earnings calls. It doesn’t really fit the shopping-focused mission.

Perhaps Twitch is just a rare misstep for the Amazon ad juggernaut. Perhaps live streaming was only ever going to be so big. Perhaps some analysts (like me) have overstated just how much people want to participate in their content experience.

Or perhaps YouTube and later TikTok just got too big.

A few weeks ago, I had Ben Mathews, partner at Night Ventures, on my show. He was practically read to read Twitch its last rights.

[Amazon has] “effectively deprecated the product,” he said. “It's not very important, it's not a priority to them. And you've seen over the years, you've seen a lot of people flee to other platforms like YouTube, like TikTok, to post gaming content.”

“[Live] streaming as a business model seems to be dying or nearly dead. And that's the big challenge I think that advertisers, advertisers probably are facing is the core platform, which has been Twitch is, is in my opinion, going away…if Amazon couldn't make the business model work and could make the economics work, my guess is that the economics of streaming may not, may not survive period.”