The Amazonification of Twitch
The gaming platform has remained disconnected from its parent since Amazon paid nearly $1 billion for the company in 2014. But no more.
After years on its own island, Twitch is finally feeling the effects of its acquisition by Amazon eight years ago.
The gaming livestreaming platform issued an emphatic statement on Wednesday, addressing calls from thousands of streamers to increase its revenue splits from 50-50 to 70-30. Its answer? No.
The statement in itself is incredibly out of touch, but none of that’s surprising, given that Twitch’s communications team and the company president whose name is attached to the statement were hired in a post-Amazon acquisition world.
Among the highlights of the statement were a callout of a fictionalized streamer—who streams on average 50 hours per week, but only to 100 concurrent viewers at a time—and market-rate prices for Amazon Web Services (AWS) server cost, which Twitch certainly does not pay (it pays a reduced price and the cost ultimately falls on Amazon).
Twitch is not just denying a 70-30 split for all creators, but it also publicly stated that it is reducing all creators, including major streamers who signed preferential deals, to 50-50 after the first $100,000 earned, beginning in June 2023.
The result? A lot of vitriol.
On Wednesday evening, a handful of ex-Twitch staff members hosted a Twitter Space letting members of the community speak their minds about the change.
The discussion lasted five hours, and more than 58,000 people listened, including the likes of Félix “xQc” Lengyel and Hasan Piker, the 1st- and 18th-most watched streamers on Twitch, respectfully. Speakers included Marcus “djWHEAT” Graham, one of Twitch’s earliest employees; Theo Browne, who worked at the company as a software engineer for four years; and Devin Nash, the co-founder of advertising agency Novo, which reps several streamers, including Kaitlyn “Amouranth” Siragusa, the 94th-most watched streamer over the past month.
Much of the discussion focused on how those speaking feel about Twitch moving away from its roots—reducing its investment in esports and foregoing its warm relationships with creators. Nash, who also made a video on Wednesday about the statement and changes, hammered the point that Twitch doesn’t generate much revenue, in part to its inability to track user data, reducing its ability to sell high-CPM ads, and how its subscriptions are counter to its revenue opportunities with ads.
But what it ignored is the changing of the guard at Twitch, moving it closer to its parent company, and a stronger push for it to correct its profit and loss.
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When Amazon first acquired Twitch, the retailer’s business priorities were completely different. Back then, much of its focus centered on its retail operations and an increasing investment in hardware—whether that be the Echo line, which also launched in 2014, or its later investment in Ring, which it went on to acquire.
Post-acquisiton Twitch lived under Andy Jassy, then the head of the group responsible for AWS, one of the most profitable arms of the Amazon business, and now the succeeding CEO to Jeff Bezos. Under Jassy, Amazon integrated Twitch’s innovative livestreaming technology to build AWS’ Interactive Video Services, the exact technology that Twitch president Dan Clancy indicated Twitch is being billed for by its parent. But on the content side and the profit-and-loss side, Jassy remained relatively hands off, allowing Twitch to aggressively spend.
Shortly after its own acquisition in 2014, Twitch acquired GoodGame Agency, an esports powerhouse sales agency and then the owner of a number of esports teams, including Evil Geniuses and Alliance. A couple of years later, under fire for alleged favoritism by other major esports teams Twitch would later represent for sales, Twitch divested both of those teams to their employees for almost nothing.
In 2016, Twitch acquired media and community company Curse for an unreported sum. It used Curse’s software assets to launch a Twitch desktop app, which debuted in 2017. But the company found little use for Curse’s media assets and sold its wiki websites and other media subsidiaries to Fandom in December 2018. In 2020, it sold the software assets acquired from Curse to Overwolf and sunset the Twitch desktop app in April 2022.
Twitch also signed millions of dollars of broadcast deals with esports tournament organizers and teams, even when in theory there was no legitimate competitor to it.
Fearful that a seven-year, $350 million deal between Riot Games and MLB Advanced Media (BAMTech)—who helped develop the WWE Network, HBO Now and WatchESPN—would see much of the “League of Legends” content move on, Twitch panicked, signing a two-year, $90 million deal with the Overwatch League, which former Twitch employees now call the “worst deal the company ever signed.”
Ultimately, Riot and Disney, who acquired BAMTech in 2017, decided to call the deal quits, meaning “League” content remained on Twitch and the money spent on Overwatch League was basically all for naught.
Simply put: Twitch has spent a ton of money on things that have served almost no return.
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But times have changed for Twitch over the past year.
In May 2021, 22-year-veteran Amazon executive Jeff Blackburn returned to the company after a several-month sabbatical. Blackburn came back at a pivotal time. Amazon has begun its aggressive pivot from a logistics and retail company to an everyday company, further investing in devices, electric vehicles like Rivian, and content, buying rights to “Thursday Night Football” and “Lord of the Rings” prequel “Rings of Power” and acquiring podcast giant Wondery.
Upon Blackburn’s return last summer, Amazon finally consolidated all of its content groups. Now, for the first time ever, Prime Video, Audible, Wondery, Amazon Music and Podcasts, Amazon Game Studios, and Twitch live under the same umbrella. That’s good for potential collaboration. That’s not so good for Twitch in the short term.
With the reorg, Amazon has become much more scrutinous of its profit-and-loss margins, curbing aggressive spending—none more notably than Twitch. Since 2018, Twitch has reduced its number of preferential creator deals from about 20% of the site’s streamers to an estimated 5%.
People are wondering how many @Twitch partners have a 70/30 (or better) split. While I don't have up to date data as Twitch has removed that information from the API I still have the Tweet from 2018. Back then ~21% had a non-default contract.
— CommanderRoot (@CommanderRoot)
Apr 27, 2022
Its Wednesday statement made it clear: no more preferential deals for anyone.
Twitch’s 50-50 deals are egregious compared to other platforms. YouTube Gaming provides 70% of fan-supported revenue to creators. Patreon takes just 8% commission from its creators. Other platforms like OnlyFans and Fansly, which some Twitch creators also create content for, take 20%. Fanhouse, a safe-for-work competitor to the aforementioned sites, takes just 10%.
What Twitch does offer, though, is audience. While Twitch discovery is extremely tough for up-and-coming streamers, once someone hits, they stick. There’s a sizeable audience, in the billions of users, of people who remain on the website after their favorite creator goes dark. That presents an opportunity, even if a small one.
That audience grip is eroding, though, albeit slowly. YouTube has continued to invest in creator signings, and not aimlessly. Its signings reflect a trend of bundling creators who share an audience overlap, in hopes that when one goes offline, another is live, or that those users will move on to something new.
In the short term, though, the Twitch crunch is disheartening to its creators while also further pissing off its audience.