When Twitch got bought out by Amazon a while back, people were holding their breath for how the deal would work out. Around the same time, Google supposedly was interested in picking them up but streamers on Twitch feared that Twitch would eventually dissolve like other Google acquisitions and eventually everyone would be forced to migrate over to YouTube. Amazon picking up would mean more competition in the streaming space but the real question that remained was how Amazon would be able to monetize the platform. The answer: they can’t.
The most obvious answer to the above question was tossing more ads onto Twitch. These days, you can’t adblock Twitch’s video ads as they are built into the streams themselves. So if you want to avoid an ad, you’re forced to subscribe or get some premium setup. Most people at this stage (I’m guessing) won’t get more than 1-2 subscriptions per month (one for Prime, if they have the service, and one other). But I figured once video ads were forcibly injected into streams, there would be a gradual decline in overall viewership just because people get annoyed by irrelevant ads.
The other thing that people imagined was more partnerships with Twitch through Amazon. There have been some levels of integration such as Amazon Games where you have situations allowing Twitch Partners to enable a Drops for viewers to get some sort of consolation prize. But these things aren’t great and most of the Drops are crappy cosmetics or something of that nature.
But what is causing this decline or money loss for Twitch? Why is it having these problems?
Despite all these forecasts and mechanisms that have forced Twitch to get more aggressive in monetizing their platform, the real issue is that Twitch sucks. Streaming platforms are horribly cost ineffective for almost every IT related reason imaginable. Transcoding, which is a huge resource sink, requires a great amount of CPU power especially to get effective quality. That means having tons of servers with a focus almost strictly on processing video feeds. Second, you need tons of hard drive space to store videos, most of which are just VODs. Clips, the bulk of these VODs, are fun but practically worthless when it comes to monetization. However, they take up a great deal of space and network bandwidth for no monetary gain. None of these clips I’ve seen ever had an Ad within it just because most are anywhere between 10 seconds to a minute at most. So there’s no reason to play an Ad when it would double the size of the clip.
Lastly, network cost is going to be outrageous. I can only imagine that the worst cost in all of this besides data center energy is bandwidth. Bandwidth has never been cheap, it’s the main bottleneck of video streaming and there’s no way to get around the problems when a service like this is server side oriented.
Overall, what you’re looking at is just a huge waste of a service with little return. In fact, I don’t doubt that some hidden issues are things like dealing with copyright strikes when it comes to music and video clips that originate from outside sources. So add legal as a subtractor.
Then on the client side, you have a huge number of unimportant streamers trying to make it that will never make a dime for the company. I’m not even talking about making a dime for themselves. I’m talking about people who will perpetually have 1 viewer at a time (most likely the streamer). And even if that person streams consistently, it’s a huge bandwidth and processing cost to support someone who can’t provide any bottom line value to the platform.
When you look at Twitch over time though, it’s pretty much stagnated. Or maybe the real issue is that it hasn’t grown that much since day 1. Maybe the numbers spiked at some point and the number of subscribers are more reliable. But the features for the platform itself are the equivalent of Myspace in its heyday. While certain personalities have evolved, came and went or were your one hit wonders, I just feel the appeal that Twitch once had at its peak has long lost its luster. The “fun days” of Twitch are dead because there’s very little growth for the platform and streamers alike. And even if they have consistent eyeballs, the growth at the rate they need to be profitable probably will never be achieved in its current form.
And it’s sad because this is a thing that needs a real kick in the pants similar to when Facebook came out as a rival to Myspace. Mixer was the last hope of a real competitor but they quit before they allowed themselves to have a chance. After certain bad policies came out from Twitch, I think Mixer, if it were resurrected, could have had a chance to survive based on the number of unhappy streamers and viewers. And quite frankly, Mixer was far better in everything except for the numbers and names.
While it is clear that there needs to be a streaming platform for the non-mainstream audience to create their own “shows,” the real issue is how to make it such that there is a return. Streaming games and very low to no production cost content is at the very bottom of the content barrel when people have to choose between the recent arise of various media streaming platforms.
My argument from the early days is that server side streaming is just too costly because you put the bills onto your side rather than offloading it to the customer. I still believe there needs to be a client-to-client (or p2p if you want to go the file sharing type of route) mechanism that puts more work onto the streamer. It’ll be more like the old sysop days where you had multiple modems running into ones home to run a BBS. That way you’re only limited by your own network.
The issue, of course, from this becomes how would a company like Twitch be able to control what goes on? The answer: they don’t. Instead, you’ll just have smaller streams that are more akin to what Discord has except even less controlled. It’ll be primarily software driven and people will run the servers themselves. But I can’t see non-mainstream streaming services being able to survive when the content quality and the people who produce the content are low.
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