Amazon’s Twitch is considering reworking top talent remuneration in order to increase profits.
According to people familiar with the plans, Twitch, Amazon.com Inc.-owned live-streaming website, is considering changes to how it pays top talent, an effort that would boost profits but risk alienating some of its biggest stars.
The proposed changes would incentivize streamers to run more advertisements. According to the people, who asked not to be identified because the discussions are private, the proposal would also reduce the proportion of subscription fees given to the site’s top performers.
According to the sources, some changes to Amazon’s Twitch monetization structure could be implemented as soon as this summer. Twitch is considering reducing the revenue share of channel subscriptions granted to the top tier of streamers in its so-called partnerships program from 70% to 50%. Another option, according to two of the people, is to create multiple tiers and set criteria for how to qualify for each one. Twitch may offer to lift exclusivity restrictions on partners in exchange, allowing them to stream on Google’s YouTube or Facebook.
In recent years, the popularity of live videos of people playing video games has skyrocketed, giving rise to a new breed of internet celebrities. Amazon’s Twitch is the market leader, but Amazon is increasingly focused on the site’s long-term profitability. Although the unit has recently begun work on new, profit-driven programs, some employees claim that the change is detrimental to the unit’s users. According to Bloomberg, top and longtime employees have been leaving Amazon’s Twitch in recent months, claiming that the company has lost touch with its community’s needs.
Amazon’s Twitch still has a sizable celebrity following. According to TwitchTracker research, it has more than 51,500 people in its partnership program, including Thomas “Tommyinnit” Simons, who has 9,000 subscribers who watch him play games like Minecraft. Viewers can pay $5 to $25 per month to subscribe to a specific streamer and receive digital badges, custom emoticons, and other benefits. Streaming partners typically receive half of the subscription revenue from their channels, but Twitch regularly rewards top performers with a larger cut.
In addition to subscriptions, partners currently receive a fee for running ads on their channels. For years, that rate, which ranges from $3.50 to $5 per 1,000 ad impressions depending on a streamer’s location, has remained largely unchanged.
Amazon’s Twitch, on the other hand, has recently been experimenting with new ad formats. It was announced this year that creators who stream at least 40 hours per month could receive $100 in exchange for running two minutes of ads per hour. With more ad minutes, the payout increases. A new proposal under consideration would create a revenue-sharing arrangement, offering streamers a more lucrative model.
Ads on the platform are divisive because they interrupt live programming. Viewers frequently complain that they miss key moments of a streamer’s gameplay, and streamers have claimed that advertisements alienate their audience and hurt their metrics. However, some Amazon’s Twitch streamers see ads as a necessary annoyance when subscriptions alone aren’t enough to support their businesses.
Running a large-scale live-streaming business is costly for Amazon. Amazon’s Twitch was purchased by Amazon for $970 million in 2014, and after years of focusing on growth, Twitch executives are now focusing more on financial sustainability. Twitch’s ad push is part of a larger trend in the media industry. Netflix Inc. announced last week that it was experimenting with advertisements. According to Insider, Sony Group Corp. is also planning to sell advertisements for PlayStation games.
Twitch has been debating whether or not to change its 10-year-old partner program for several years. Performers’ complaints about work-life balance were brought up in the early discussions. Some people work for up to 12 hours a day. Employees at Amazon’s Twitch started tossing around the idea of providing health insurance or the ability to pause subscriptions while on vacation so they wouldn’t lose customers.
Today, the emphasis is on monetization. Top talent has fewer options for reaching large audiences now that Amazon’s Twitch has established itself as the premier destination for game live-streaming. YouTube and Facebook Gaming have previously offered large sums of money to entice top creators, but such deals are rare and not always successful. After their contracts with Facebook Gaming or Microsoft Corp.’s now-defunct Mixer expired, several streamers returned to Twitch.