Competition for Twitch is good news for the industry

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One of China’s numerous streaming services PandaTV declared bankruptcy a few days ago. The decision while not unexpected does raise a few questions. Will there ever be a strong competitor to Twitch in the video game live streaming industry? Or will Twitch continue to dominate the scene and have a near monopoly when it comes to live-streaming in Esports?

We have seen several game live-streaming services come and go. There are a few still active, but they are not really a competition to Twitch. However, this won’t be the case for long and we will see Amazon receive competition in this segment very soon.

What is Twitch and how big is it?

 

Justin Kan founded Justin.tv in 2005. It was a startup allowing users to live-stream their personal lives, something similar to a ‘Big Brother’. The response to the website was mixed at best, while some users love it there were many who wanted more. Users kept asking how they could use the site to stream their videos online. It was a feature that received a lot of attention and finally Justin.tv pivoted to allow users to stream their own video online.

Allowing users to stream their videos online resulted in exponential growth for the streaming site. Initially educating users to stream online had many obstacles. Streaming online required a lot of setup including streaming software, microphones and other decent hardware. Justin.tv hired a streaming specialist to teach users how to stream online.

Eventually, the streaming culture took off with faster, cheaper internet speeds. In 2014, Justin.tv rebranded into Twitch.tv and the company focussed all their resources into Twitch. The reason for this segregation and eventual rebranding was due to the phenomenal growth of the gaming section. Users were always wanting to stream their games online. The viewers themselves loved to watch high-skilled individuals stream their gameplay. Twitch was an entertainment platform and we have several streamers who make a living out of the website today.  

Twitch sold out to Amazon for $970 million

The contest between Amazon and Google to buy the streaming service Twitch was well-known. Google already owned the video-sharing website Youtube and there were concerns of potential antitrust litigations kicking in. Amazon came in and bought twitch in an all-cash deal on August 25, 2014. It was a big step forward for the industry, and the Twitch CEO explains their decision to go to Amazon in a public statement.

Your talent, your passion, your dedication to gaming, your memes, your brilliance – these have made Twitch what it is today. Every day, we strive to live up to the standard set by you, the community. We want to create the very best place to share your gaming and life online, and that mission continues to guide us. Together with you, we’ve found new ways of connecting developers and publishers with their fans. We’ve created a whole new kind of career that lets people make a living sharing their love of games. We’ve brought billions of hours of entertainment, laughter, joy and the occasional ragequit. I think we can all call that a pretty good start. Today, I’m pleased to announce we’ve been acquired by Amazon. We chose Amazon because they believe in our community, they share our values and long-term vision, and they want to help us get there faster. We’re keeping most everything the same: our office, our employees, our brand, and most importantly our independence.

Emmett Shear, CEO to BusinessInsider

Over the past years, Amazon has not involved itself in many of Twitch’s decisions. However, recently they have made significant changes to some of the former employees in Twitch. These actions are due to business decisions as they look to extract more out of Twitch and help it grow to new heights.

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A look at the competition in the past

We have seen several companies try to compete against Twitch. The sheer numbers on Twitch’s platform make it one of the most lucrative companies to compete against. However, these companies and websites could never really provide the quality or incentive for users to switch platforms.

Here are a few companies which have come and gone over the years.

HitBox

 

Hitbox was set up with the aim to provide a superior streaming service and reduced latency. The website had multiple investment rounds and looked set for a bright future. They struck deals with tournament organisers such as ESL, Dreamhack, WarGaming and partnered with NAV-TV in South Africa. At the time of its shutdown in 2017, Hitbox had around 6 million active monthly users. They sold their company to Azubu. The Hitbox website now redirects to Smashcast.tv

Azubu

 

Azubu is a streaming website that started in 2012 and intended to break into the esports mainstream with a bang. Their deals with Faker and Madlife definitely brought them a lot of attention. However, the company was plagued with financial problems and the investments into the company started decreasing. In fact, Sapinda Ground would drip-feed funds to Azubu in an attempt to accelerate growth.

The ‘Drip-feed’ method would see Sapinda provide the company with small amounts of money, $ 1million a month for all their expenses. This meant late paychecks, multiple unpaid vendors and a general sense of dissatisfaction amongst all concerned with the venture. The non-traditional method of funding proved to be a PR disaster for the company as it lost face in the esports industry. In fact, they still have several unpaid bills and are embroiled in legal battles. Unpaid Prize money in multiple esports titles such a Dota 2 and CS: GO meant that they lost the core of the esports audience due to their lack of funding from Sapinda Group.  

Youtube Gaming

Youtube Gaming is one of the hottest competitors to Twitch right now. The parent company, Youtube already houses the largest number of gaming videos on the Internet. They don’t have much experience when it comes to live-streaming video games but their platform definitely does not disappoint. It provides excellent quality videos and also allows users to go back a few seconds to watch particular gameplay that they might have missed out on.

Recently, they also added the ability for viewers to support their favourite streamers financially. Considering how many Twitch Streamers already have a Youtube channel and a successful one at that the switch to Youtube Gaming can be a much better experience for them. Youtube Gaming was the platform for

FaceBook Watch

 

Facebook’s entry into esports streaming came as a bit of a surprise to many. Not many knew of Facebook’s live streaming service, so the general perception of their ESL deal was apprehensive. The platform was just not ready for esports streaming and the dip in numbers definitely was a learning point for ESL. ESL lost nearly 80% of its viewers due to their ‘exclusive’ deal with Facebook. The initial comments by the company projected a positive outlook and a hope for the new features in Facebook soon. However, this did not see the active implementation and ESL One tournaments generally saw lower viewership numbers.

In February 2019, ESL and Facebook ceased the current exclusivity clause to their deal. This expansion of their contract saw ESL announce that they will stream all ESL matches on Facebook, however, Facebook will not have exclusivity to the ESL matches. This was a welcome move for the viewers as they could watch the top esports teams in action onTwtich. The biggest reason for Facebook Watch’s downfall was the lack of quality and features in their stream. It showed that the general public is not averse to having another streaming service, especially when it displays top tier matches. However, esports viewers will not take lightly to sub-par streaming platforms and the lack of certain essential features.

Growth Momentum across multiple categories

The competition has not really affected Twitch in a negative way. One could say, Twitch’s success would be bigger if these ‘competitors’ wouldn’t pop up. However, the fact that they have this competition and still maintain their growth trajectory is truly impressive.

The rapid progress for the Amazon-owned company comes mainly due to the number of people watching the live-streams. We have seen the number of hours watched on Twitch increase throughout the past few years. We are close to touching 1000 million hours spent watching Twitch in a month. It is truly astonishing considering that the website was barely touching 100 million a few years ago.

There are other metrics for measuring the growth of Twitch over the years. This data is collected from the website twitchtracker.com which accurately shows the statistics over the past several years.

It’s not only the viewership data but more people are streaming. It is a hobby, a passion as well as a livelihood for certain people. Being a Twitch streamer does not always mean you need to be good at the game. For a streamer to be successful, being entertaining as well as fun to watch is more important from a streamer’s perspective. The number of active broadcasters has seen its share of ups and downs, but on a general trend, it is showing upward mobility.

 

Twitch Partners

Twitch partners up with broadcasters who regularly attract a decent viewer base. In 2017, the company made changes to its partner policy allowing more streamers to become a partner. This saw a significant rise in the number of Twitch Partners in the next two years.

The monthly Broadcasters and Partners program saw an uptick after 2017 when Twitch made multiple changes to the program
Concurrent viewers have seen a steady increase in numbers. The current numbers stand almost 10X times those of 2012.

 

Another metric that helps us witness the platform’s stupendous growth is the rise in the number of concurrent viewers. This number has risen more than 10 times since 2012 and it does not show signs of slowing down. The increased investments in esports and gaming only further fuel the rise in more viewers. Of late, the involvement of endemic sports organisations and big sporting brands in esports ha brought in even more viewers into the industry.

The growth in the number of streamers and viewers has seen growth. However, the number of viewers per streamer has not increased significantly.

The increase in better quality software and ease of broadcasting on Twitch meant that the number of streamers rose by a large margin.

In fact, it has decreased by almost half in the course of the past six years. A big reason for this change is the exponential increase in the number of streamers. With better know-how of streaming and the improvements in hardware and software, more people are taking to streaming. This does not always translate into a huge following, but the decrease in the ratio of viewers per streamer is noticeable.

Twitch continues to grow in this new era of esports

In the upcoming years, we expect to see a correction in the esports economy. The current system is inflated with little returns for the investments. We have seen many teams/sponsors pull out due to lower ROIs. However, this is a problem that arose because of extremely high expectations from such a young industry. Esports is here to stay and it will continue to grow over the years. However, there are many people who are unfairly representing esports as the provider of high returns at present. It is not the case and we see investors pumping money in the of high returns immediately. When they realise the actual standing of the industry, it is a huge setback for them. Despite this, we are consistently seeing more and more brands, sponsors and teams enter esports. They realise its long term potential and every failure breeds another wiser and successful organisation.

The number of viewers, channels and streamers has seen steady growth since August 2018 as shown by the statistics above. Esports is set to reach $1.1 billion in revenues in 2019 itself. With the Overwatch league ‘Home and Away’ Format to be fully functional by 2020, it will increase the scope and the reach of esports.

Who can compete with Twitch?

 

There is no doubt that competition breeds innovation and creativity. Twitch rose to the top by picking a niche category which saw exponential growth. However, in today’s age, Twitch is the monopoly when it comes to esports live streaming. With the growing numbers, it is essential for Twitch to provide more and more features. They also have to keep their servers and systems ready for the increased viewership and streaming numbers. Twitch has used its influence and domination in the market to arm-wrestle Tournament organisers into giving it a better team. Their feud with ESL was well-known and it resulted in ESL going for Youtube Gaming first and then a disastrous stint with Facebook Watch.

Currently, Youtube and Youtube Gaming provide the only semblance of competition to Twitch. Youtube is the largest reservoir of Gaming videos. Youtube Gaming has features that provide a better experience than Twitch. Of course, there are always areas for improvement and it is also essential to pull people away from Twitch. In the near future, hopefully, we see more competition between live streaming websites. It will only result in innovation and more features for the viewers/streamers.


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