According to a recent report, Amazon-owned live streaming platform Twitch is failing to generate as much ad revenue as expected.
The Information reports that following Amazon’s $1 billion acquisition of the popular video game streaming platform Twitch over five years ago, the site has not performed as well in the advertising department as expected. Twitch was expected to be Amazon’s answer to Google’s YouTube but so far has not generated the same sort of revenue that Google’s video service has.
Twitch reportedly generated approximately $230 million in ad revenue in 2018 according to individuals with knowledge of the situation and as of mid-2019 it was set to generate $300 million in ad revenue for the full year. However, this falls short of the company’s internal goal for the year of $500 – $600 million. In comparison, YouTube generates billions of dollars in ad revenue for Google annually.
Twitch’s audience in the United States also appears to be contracting, reporting 18 million unique visitors in the U.S. in November down from 22 million during November of 2018 according to Comscore. In comparison, YouTube reported nearly 236 million unique visitors in the U.S. in November and 233 million in the same month a year earlier.
Twitch has expanded its forms of revenue by adding a subscription model. By late 2019, Twitch’s commerce business had surpassed its ads business in terms of revenue according to sources with knowledge of the matter.
David Cole, the founder of the firm DFC Intelligence, which tracks the gaming industry, discussed Twitch’s potential growth opportunities stating: “I don’t know if the Twitch brand really extends into other categories much beyond what would interest their core demographic. The hype around the area was way more than the numbers would have indicated.”
Even individuals that stream on the platform have begun to question the website’s viewership numbers and noted that as more individuals begin to use Twitch to livestream, the number of viewers per streamer essentially drops. A video by the gaming-focused YouTube channel Alpha Gaming discusses this in detail:
Amazon offers one free Twitch subscription to a channel of their choice if they have Amazon Prime, previously one of the perks of subscribing to a channel using Twitch Prime is that viewers no longer see ads on that channel. Amazon has since reversed this decision and explained the move in a blog post stating: “We want Twitch to remain a place where anyone can enjoy one-of-a-kind interactive entertainment, and ads allow us to continue making Twitch the best place for creators to build communities around the things they love and make money doing it.”