Amazon Paid Almost $1 Billion for Twitch in 2014. It’s Still Losing Money.

[entremet]

https://www.wsj.com/tech/twitch-amazon-video-games-investment-9020db87?st=039kkqwln8o6ery&reflink=article_copyURL_share

Amazon.com paid nearly $1 billion to acquire the live-video startup Twitch Interactive in 2014. A decade later, the retail giant has received little financial return from one of its bigger acquisitions

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Known for hourslong broadcasts of videogame play, Twitch remains unprofitable despite periods of explosive popularity, according to current and former employees knowledgeable about its finances.

Documents reviewed by The Wall Street Journal show Twitch's biggest-paying users are opening their wallets less, and third-party data reflect that growth in new users and engagement has slowed.

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Insiders said they worry Twitch is at risk of becoming what they called a "zombie brand" at Amazon—internal projects or acquisitions that have been sidelined because they haven't lived up to expectations. These staffers pointed to book-review app Goodreads, online task finder Mechanical Turk and discount website Woot.

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Zombie brand? lol. No punches pulled.

I used to like Twitch but the ads killed it for me, especially as a Prime member. It was a nice perk. But they removed it.

Also, I think the content got stale. Top streamers didn't invest in being better entertainers, just coasting and asking for me money. No thanks.

Creatives of all types hone their craft. But most of the streamers are rather boring honestly.

What are your thoughts on Twitch?

 

[sir_crocodile]

I don't like twitch's ui or how resource hungry it is compared to youtube, so I very rarely use it.

 

[Reckheim]

it was fun when I was into competitive fortnite, seeing people be so good at a game I enjoyed was entertaining. I also like watching speed runs but I just watch the world records on youtube.

Never really watched it for the 'personalities; tho.

 

[S1kkZ]

unwatchable because of all the ad breaks. i only watch max dood and only via archive. i tried to watch his evo content live...impossible.

 

[Irrotational]

I know where the YouTube icon is on my phone...I don't know where Twitch is...and can't be bothered to learn it.

 

[m_shortpants]

streaming video at scale is very expensive, I'm not surprised.

 

[Patriiick]

Good.

 

[oakenhild]

I use twitch frequently (less so lately), but no longer have prime so can't subscribe without paying.

Twitch has also gotten significantly worse in the last couple of years as the advertising ruins the 'channel flipping' ability of twitch as you just get bombarded with ads. I do understand the trade-off of not paying is seeing ads, but the way they do it has ruined twich for me and it's just not really a service I'm willing to pay for.

 

[Orayn]

YouTube also took the better part of a decade to make a significant profit, Twitch will be okay.

 

[darthbob]

Twitch is unusable for me on my SmartTV, so I stopped paying for Turbo.

 

[Bigkrev]

Twitch Prime really doesn't make a ton of sense to me, business wise. Is there anyone on earth who's decision to get Amazon prime comes down to a Twitch sub a month? And if they got rid of it, doesn't the "economy" of twitch break down for a lot of people who rely on that money each month? It just seems like Amazon is subsidizing the creators on it's platform in a way that doesn't grow Amazon's business....

There are a couple of streamers who I liked putting on when I go to sleep. Then, 7 years ago, Twitch vanished from my Roku, and at some point, stopped working. Then, I replaced it with an Apple TV. For a full year, there is a glitch where, when you watch VODs (the only thing I watch on Twitch), you will have stretches of 10-seconds to 20 minutes (random) where the screen will go black while audio continues, and then when the video returns, it flashes through all the time you missed in 2 seconds and then causes the audio to be off from the video for the rest of the video. I had to replace the Apple TV in the bedroom with an Xbox Series S which seems to work fine.

On desktop, the site is a mess as well, and it's always a shit app experience no matter the platform. I assume they would have fixed it by now if they were able to.

 

[OGlol]

I don't like twitch's ui or how resource hungry it is compared to youtube, so I very rarely use it.

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What resources are you referring to here? Genuine interest because twitch always seems to be less resource hungry on my machine, which is why I use it.

 

[keyrodi]

Twitch has also gotten significantly worse in the last couple of years as the advertising ruins the 'channel flipping' ability of twitch as you just get bombarded with ads

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The channel flipping aspect rarely gets discussed, but that was the best thing about twitch imo. I used to follow dozens of streamers and flip back and forth between them while I play games like Diablo or the Elder Scrolls. You can't do that effectively without subscribing to a bunch of people, and that sucks.

 

[GamerEDM]

isn't amazon worth like 2 trillion sounds like a drop in the bucket.

The platform is fine it's really the only live streaming platform I use for gaming. I don't like the YouTube one .

 

[RandomlyRandom67]

YouTube also took the better part of a decade to make a significant profit, Twitch will be okay.

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Does Alphabet break out YouTube specifically as its own segment? I thought it's stuffed into services so it's unclear how much profit it makes

 

[oneils]

I only seemed to like twitch when playing certain action rpg type games. Like maybe Destiny 2 or Diablo and Path of Exile.
I find it interesting listening to players who know a lot about the games' systems or lore.
For anything else, I don't really bother. I haven't played either of those games at all in a decent while. So I don't watch twitch anymore.
If I want to know more about a game's systems or lore I just look for it on youtube now.

 

[ThatMeanScene]

Yeah, things are not great for Twitch. But I think the article should've mentioned Amazon IVS which is a service using Twitch's tech that nets Amazon the revenue and not Twitch. Its not known how successful and lucrative IVS is though.

Why Amazon is bringing Twitch's most lucrative parts deeper into the Amazon Ads fold

At the moment, Amazon appears to be picking apart Twitch, with an eye toward potentially transplanting its most lucrative assets elsewhere in the company.

digiday.com

 

[Dyno]

The only tike I've really tried to use it where during events like TGA. It barely worked, would constantly buffer etc. The youtube streams worked fine. My experiences with twitch have basically always been bad

 

[SirKai]

I only use Twitch to watch FGC tourneys or conferences/showcases, but even then, that stuff is also usually streamed on Youtube as well.

 

[Masterz1337]

I never understood why this platform exists. Every time I've had to use it has a horrible UI, requires a separate account from anything else I use... I get they did streaming before YouTube and it's "for gamers" but the minute Youtube started to have the same offerings I never got why people kept using it.

 

[808s & Villainy]

i don't think people realize how insanely expensive online video streaming is

YouTube also took the better part of a decade to make a significant profit, Twitch will be okay.

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I's a completely different business model. pretty much the majority of companies/brands that have any sort of embeddable video and/or don't care for a white label solution (ie. without any branding) use Youtube, and all those videos have ads, which is how primarily how Youtube makes money

 

[jwhit28]

Does Twitch have to be profitable? When Twitch was bought by Amazon, it was to prevent Google from buying them. The purchase is still serving that goal.

 

[Kyou]

Love when friends are like "Yo check out this crazy match at EVO right now" and I get "1 of 6 commercials (2:00)"

completely ruined twitch

 

[entremet]

Yeah, things are not great for Twitch. But I think the article should've mentioned Amazon IVS which is a service using Twitch's tech that nets Amazon the revenue and not Twitch. Its not known how successful and lucrative IVS is though.

Why Amazon is bringing Twitch's most lucrative parts deeper into the Amazon Ads fold

At the moment, Amazon appears to be picking apart Twitch, with an eye toward potentially transplanting its most lucrative assets elsewhere in the company.

digiday.com

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The AWS strategy

 

[Tovarisc]

unwatchable because of all the ad breaks. i only watch max dood and only via archive. i tried to watch his evo content live...impossible.

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Streamers have a lot control over how, when and how many ads run. E.g. CohhCarnage run ad blocks during his intro and outro so actual stream of games is uninterrupted.

TLDR: Max was milking ad cash from larger than normal viewership.

 

[behOemoth]

How is Twitch still unprofitable despite being the only live-streaming platform of relevance pretty much everywhere except Asia, while Asian countries like China or Japan have even multiple live-streaming platforms?

Or am I too ignorant and can't see how streaming on TikTok and Instagram is gigantic as well?

 

[alr1ght]

What is the business plan to even make money? Streaming video seems crazy expensive. Their player is also horrible, no rewind still in the year of our Lord 2024? Get out of here.

 

[Var]

I will watch it from time to time for tournaments or events but I can't imagine paying regularly.

 

[NukeRunner]

Well at least something good came from Twitch

 

[Xando]

How is Twitch still unprofitable despite being the only live-streaming platform of relevance pretty much everywhere except Asia, while Asian countries like China or Japan have even multiple live-streaming platforms?

Or am I too ignorant and can't see how streaming on TikTok and Instagram is gigantic as well?

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Live streaming infrastructure on this scale is insanely expensive to run

 

[Thewonandonly]

unwatchable because of all the ad breaks. i only watch max dood and only via archive. i tried to watch his evo content live...impossible.

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Bro my ass watches kinda funny conference streams. 1:30 ad break when I get back there freaking out about how doom eternal looked… was so mad haha

 

[nihilence]

Bandwidth, prime gaming perks and subs.. They need a lot of ads and whales to keep afloat.

 

[808s & Villainy]

How is Twitch still unprofitable despite being the only live-streaming platform of relevance pretty much everywhere except Asia, while Asian countries like China or Japan have even multiple live-streaming platforms?

Or am I too ignorant and can't see how streaming on TikTok and Instagram is gigantic as well?

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Because video streaming is expensive and ads likely don't make up for those costs. VOD (pre-recorded) is fairly expensive on its own, but you're only paying for bandwidth costs. Live streaming, which involves bandwidth and transcoding on the fly bumps up those costs

 

[HellofaMouse]

twitch was pretty much my 2nd monitor "tv" for a while.

with the way they've been pushing ads, and how bad their player -still- is, i cant be bothered with it anymore.

the communitys gotten much worse too.

 

[Roy Ayers]

Twitch is too shit to go the way of Comixology. People liked Comixology.

 

[Iadien]

Twitch's problem is that the vast majority of streamers lose Twitch money. Fewer ads would obviously be a better experience for viewers, but that would mean even less money for Twitch. That would solve nothing.

 

[Dyle]

Any streaming without an entry fee can only operate as a loss leader, it will never be possible for it to be independently profitable. Twitch's days are numbered once Amazon finally gives up on Luna, which I imagine will happen shortly after XCloud leaves beta and finally proves that games streaming is also not a sustainable business.

 

[Unknownlight]

Does Alphabet break out YouTube specifically as its own segment? I thought it's stuffed into services so it's unclear how much profit it makes

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Right, they say it's profitable, but don't give numbers on YouTube specifically.

We do have YouTube-specific revenue numbers. YouTube made about $30 billion in revenue last year. It makes a profit because it surely doesn't cost $30 billion per year to run the site (including paying all the creators) but we have no idea what the actual number is.

 

[entremet]

twitch was pretty much my 2nd monitor "tv" for a while.

with the way they've been pushing ads, and how bad their player -still- is, i cant be bothered with it anymore.

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It was nice background noise before they removed the ad-free Amazon perk.

 

[Meissner]

its really crazy how much better twitch turbo makes just using twitch. I forgot to cancel it after evo and now just enjoying it for the month

 

[behOemoth]

Live streaming infrastructure on this scale is insanely expensive to run

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sure, but how are the competitors in asia profitable? are they even profitable?

 

[neetproxy]

unwatchable because of all the ad breaks. i only watch max dood and only via archive. i tried to watch his evo content live...impossible.

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That was painful. Every ad break 5-10 mins apart and 4-5 ads, only to have twitch screw up and play another 4-5 ads right after was insane. Had to stop watching.

 

[Pyro]

Isn't YouTube a zombie brand for Google too though? Sure it doesn't make money, but is such a huge platform/userbase that it's still too valuable to give up on. Either way I picked a funny time to finally start watching Twitch semi-regularly.

 

[Krazie]

The channel flipping aspect rarely gets discussed, but that was the best thing about twitch imo. I used to follow dozens of streamers and flip back and forth between them while I play games like Diablo or the Elder Scrolls. You can't do that effectively without subscribing to a bunch of people, and that sucks.

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That's gotta be absolutely brutal for smaller streamers these days. Brings down discoverability a massive amount because you're essentially penalized as a viewer to enter different streams.

 

[Arkhanor]

I only use Twitch to get the Prime games and drops. Can't stand ads, specially the amount of it Twitch shoves at your face while you're there watching anything.

 

[entremet]

YouTube also took the better part of a decade to make a significant profit, Twitch will be okay.

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Different financial climate back then. It was the era of free money with zero to low interest rates.

The article specifically mentions the Amazon CEO, Bezos's successor, is looking to rein in spending.

Amazon is also behind on the AI craze in R&D heavily. So in terms of capital allocation, they will be making some cuts.

Does that mean Twitch will be gone, I don't think so, not right now, but could affect investment into the platform.

 

[Xando]

Also i would assume twitch offers amazon a lot of additional perks that might not be visible in a pure financial sense like getting people into the prime ecosystem and giving them a platform to advertise their own content and services to a large audience which probably means in the end it will be worth it for them to eat a loss on paper.

 

[Kenzodielocke]

Seems like its very profitable for the streamers though.

 

[m_shortpants]

Right, they say it's profitable, but don't give numbers on YouTube specifically.

We do have YouTube-specific revenue numbers. YouTube made about $30 billion in revenue last year. It makes a profit because it surely doesn't cost $30 billion per year to run the site (including paying all the creators) but we have no idea what the actual number is.

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If they aren't breaking out the profit/net loss, it is not profitable. We know this because as soon as Google Cloud became profitable, it started to be disclosed.

Yes, it is possible that it costs more than $30 billion to run. The infrastructure is insane. Some of the estimates are PETABYTES of video added every day.

 

[The Mango Sentinel]

The channel flipping aspect rarely gets discussed, but that was the best thing about twitch imo. I used to follow dozens of streamers and flip back and forth between them while I play games like Diablo or the Elder Scrolls. You can't do that effectively without subscribing to a bunch of people, and that sucks.

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Twitch turbo solves this

Twitch is pretty much unwatchable without Turbo, in my opinion, unless you only sub to one person.