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I don't get it. From an outside perspective, it feels like they must be raking in the cash - they take a large cut from subscribers and the number of ads is cra

I don't get it. From an outside perspective, it feels like they must be raking in the cash - they take a large cut from subscribers and the number of ads is crazy. Viewership growth seems good [1]. The product seems solid and well-built. The demand is clearly there. Serving live video is obviously expensive, but curious if that is really the biggest component (other than personnel). Would be cool if some industry insider could shed some light on what's wrong with this business. [1] https://backlinko.com/twitch-users https://backlinko.com/twitch-users

insane_dreamer 3y ago
Did they have a hiring spree during the pandemic like all the other tech companies and now returning to the mean?
- coffeebeqn 3y ago
  And record numbers of people looking for unhealthy para social content when stuck at home
nicce 3y ago
More profits. Simple as that.
- minimaxir 3y ago
  Even in late-stage capitalism, you do a 5-10% staff cut at most to trim the fat so-to-speak. A 35% cut indicates something with the business is fundamentally wrong. EDIT: I apologize for the completely unintentional derail.
  - deleted 3y ago
    [deleted]
  - niceice 3y ago
    What's "late-stage capitalism"?
    - dexwiz 3y ago
      Its modern jargon that refers to multinational, corporate focused, globalized markets. Its gone through a few definitions over the last century, but most recently its been used by the anti-work movement to deride a culture that has all but abandoned individual people in favor of the ultra wealthy. A culture where greed and money are the only virtues and all choices are driven by the bottom line. Jokes on them, that's how its always been.
      - throwboatyface 3y ago
        Farmers protested the enclosure of the commons, Luddites protested the industrial revolution, trade unionists protested for a 40 hour work week. It's not foolish to imagine the world could be better.
        CamperBob2 3y ago
        You'd have to be brainwashed to think the world would be better without the industrial revolution. That's Unabomber territory. Ignorance alone wouldn't suffice... would it?
        throwboatyface 3y ago
        Would the world be better if there were incentives to promote skilled crafts instead of racing to the bottom to produce cheap shit at scale? I'm not saying to go back to the stone ages, but ultimately there have been movements to buy local and preserve traditional ways of crafting that are push back against industrialization.
      - no_wizard 3y ago
        This isn't really correct. While yes, so called "anti-work"[0] movement (or if you're from the early 2000s, the occupy wall street movement would be of similar philosphical values, for example) uses this term rather often, it derives from the work of the Ernest Mandel[1][2] based on his work in which he used the term to describe the latter stages of capitalism post WWII as he saw it, and how it inevitably would end up in deep inequality and power concentration, to paraphrase the thesis. As far as "its always been that way" goes, I can't speak for all of the past, but there are clear models in the present that show it doesn't have to be that way. Norway & Sweden come to mind, for example. [0]: Orewellian term at its best. The movement isn't actually anti work, much like luddites weren't anti technology. This label is attached by and large to people who are centered around ideas related to equitable wealth distribution in society & more worker rights, namely. They don't actually profess to be against work, as far as the movement goes. Individuals may vary. Never the less, its clear doublespeak. [1]: Notably, a socialist. Wrote the book Late Capitalism (https://www.goodreads.com/en/book/show/931838 https://www.goodreads.com/en/book/show/931838) [2]: The term was then popularized by Fredic Jameson, another socialist, though his critique was centered around the culture of post modernism and capitalism intersections: https://jacobin.com/2023/04/ernest-mandel-marixism-late-capitalism-postmodernism-socialism-economic-theory https://jacobin.com/2023/04/ernest-mandel-marixism-late-capi...
  - chalsprhebaodu 3y ago
    [flagged]
    - minimaxir 3y ago
      Hence the implied "something with the business is fundamentally wrong".
    - iwontberude 3y ago
      How do you counter the argument by restating a premise of their argument? Are you implying Twitch is profitable because I'm pretty sure it is not.
  - paulryanrogers 3y ago
    Maybe they're unwinding some over hiring from when interest rates were low.
  - hot_gril 3y ago
    I can see 35% of the workforce at a company with a mature product like Twitch doing nothing, or working on random extra features that no longer make sense when interest rates go up. Idk if you'd call it fundamentally wrong, it made sense at a different time.
asdfasdflkj211 3y ago
You answered your own question. Twitch is solid and well-built. It doesn't need an army of well-paid engineers to maintain it and isn't seeing a great ROI on new features. Some companies repurpose all, many or some engineers when the spreadsheet says to, others fire them wholesale.
- verdverm 3y ago
  I found it to be rather buggy personally, it constantly freezes and needs to be refreshed
  - mbrumlow 3y ago
    You might need to reapply your thermal paste and reseat your cup hat sink.
    - verdverm 3y ago
      It's consistently bad across multiple devices They need to upgrade their encoding / codec I actually did replace my liquid cooler and thermal paste on the beast machine, makes no difference
  - nitwit005 3y ago
    The mobile app certainly has problems, but you don't need hundreds of engineers to squash the remaining bugs.
- londons_explore 3y ago
  Not many people realise this. Engineers build stuff. When your product is feature complete, you can get rid of most of them. Big tech companies keeping tens of thousands of engineers on staff despite their core product not seeing substantial changes for years are just wasting money.
  - VirusNewbie 3y ago
    When you're at scale, a .5% increase in performance or decrease in utilization pays for a team of engineers. Being able to have one less SaaS product bill as well. Maybe Twitch isn't at that scale, but some companies certainly are.
bitmasher9 3y ago
1. I think the infrastructure costs is probably more than you think. It’s probably the single biggest line item. They have to encode every video stream to multiple formats, and then deliver it globally. 2. The core product is pretty mature. 3. Elon raised the bar for how large of a staff cut you can make. 4. Most of their revenue is split with content creators. 5. They lost their CEO about a year ago. New guy has to make his mark.
- londons_explore 3y ago
  > Elon raised the bar for how large of a staff cut you can make. Every member of staff fired now has a beef with the company, and being a social media company those staff will probably be big social media users with quite a lot of influence. Some may set up competitors or just badmouth you and your product. Elon discovered this the hard way.
  - jjulius 3y ago
    >... and being a social media company those staff will probably be big social media users with quite a lot of influence. Genuinely curious to hear why you think this is the case. It's my anecdotal experience that the average social media company employee is just an average person like you and I, with an average number of followers.
  - dangus 3y ago
    This is an “inside a bubble” take. The idea that software engineers at Twitter are influential on the platform is laughable. How many of these accounts are software engineers? https://en.wikipedia.org/wiki/List_of_most-followed_Twitter_accounts https://en.wikipedia.org/wiki/List_of_most-followed_Twitter_...
    - vineyardmike 3y ago
      There’s more employees than just SWEs. And you don’t need to be generally famous, you need influence in key niches. Twitter has historically hired people with large Twitter followings into roles that are more external. Some of them have been interviewed by the news media (eg The Verge). I’d be surprised if it didn’t have an impact on advertisers.
Brybry 3y ago
I think viewership peaked in 2021 and has been flat or down since then. [1][2][3] I know some of my friends watch Twitch less because the ad policy became toxic. [1] https://twitchtracker.com/statistics https://twitchtracker.com/statistics [2] https://sullygnome.com/longtermstats https://sullygnome.com/longtermstats [3] https://streamscharts.com/overview#:~:text=Twitch%20growth%20by%20week https://streamscharts.com/overview#:~:text=Twitch%20growth%2...
- joegibbs 3y ago
  What happened to the ad policy?
  - echelon 3y ago
    You can't show female-presenting cleavage, for one. They change their "attire policy" on a near-weekly basis. Is it exploitative? Empowering? Toxic? Who knows! Everyone argues about everything. Twitch is ban happy with anything even remotely controversial. Things that can be suggestive or comments that can be interpreted as offensive will garner a ban. And they hate anything even remotely sex-related. Honestly, this stuff needs to move P2P. Platforms are indecisive and fickle. Just a month ago, they flip-flopped on their policy in just two days [1]. And it happens time and time again. I don't blame the ad networks (after all Twitter had all of the world government and news orgs plus sex and nudity). I blame the Twitch leadership. If you follow Twitch, the entire leadership is embroiled in the kind of drama you'd expect in a middle or high school. The community is moving to mostly Kick [2] and somewhat to YouTube Gaming. [1] https://decrypt.co/209998/twitch-walks-back-changes-after-surge-nudity-went-too-far https://decrypt.co/209998/twitch-walks-back-changes-after-su... [2] https://kick.com/ https://kick.com/
    - philwelch 3y ago
      > You can't show female-presenting cleavage, for one. They change their "attire policy" on a near-weekly basis…. And they hate anything even remotely sex-related. It seems incomplete to complain about this without also noting that Twitch (along with almost every other social media platform) has increasingly turned into a lead generation platform for OnlyFans. The rules keep changing because the OnlyFans streamers will find whatever line is drawn and absolutely spam the platform with whatever drives traffic to OF.
refulgentis 3y ago
It's happening at every tech company, over and over again, quietly and loudly. Unfortunately tech is probably the ur-contrarian and ur-isolated field, and from the reactions I see to this, I worry there will never be a systemic response by employees.
summerlight 3y ago
I guess Twitch is probably not in an area of profitable business given the infrastructure cost of video streaming services, especially in that it cannot enjoy all the cost optimization like Netflix/YouTube due to its nature of live streaming.
londons_explore 3y ago
> they take a large cut from subscribers I'm surprised they don't have a 'choose your own revshare' setting, allowing the creator choose how much to pay twitch. Obviously twitch will recommend more profitable creators, so you get a kind of 'race to the top', with creators offering twitch a larger and larger revshare, knowing that unless they do, their audience size will dwindle. It also encourages creators to come in from other platforms - if you already have an audience and just want to extract money from them, then you don't need to be in twitches recommendations and can choose a low revshare to milk the subscribers.
- joebob42 3y ago
  I think subscribers are sticky enough that this would pretty quickly drive revshare down. Especially when I imagine a sizable portion of revenue comes from the very biggest streamers, who may not need discovery from twitch at all and would then default to the lowest value. Like, this model has sort of flipped setup from what I'd think you want; the more successful you are the lower twitches cut. I suppose they could just make the minimum value 50% (iiuc this is the current value). But I'm still not sure how much it would help.
paxys 3y ago
It's just a brutal space to operate in. Even YouTube barely manages to break even.
glenngillen 3y ago
I’ve never been the target audience for this, so sharing anecdata with a sample size of 1 (well, 2 kids). But as I type this my kids are watching some streamer play minecraft on our TV. They’re watching it via YouTube though. I don’t know the last time they used Twitch, and I suspect the youngest doesn’t even know how to get there.
bjclark 3y ago
When twitch was acquired by Amazon the rumor was that they were the single biggest AWS customer and they were going to go out of business because they didn’t have the cash to pay the bills. It would have been bad for AWS and Amazon was investing in games. If you read between the lines that’s basically said in this article from that time. https://www.vox.com/2014/8/26/6067085/amazon-twitch-tv-video-games-live-streaming-league-of-legends-dota-2 https://www.vox.com/2014/8/26/6067085/amazon-twitch-tv-video...
- firstSpeaker 3y ago
  > single biggest AWS I think that has always been Amazon.com since it runs on AWS.
  - snotrockets 3y ago
    Amazon doesn't run on AWS. There's separation between Amazon resources and AWS ones, even if much of the tech stack is shared.
apexalpha 3y ago
Most of their cost will be infrastructure. Encoding and serving multiple streams per channel to different devices with a low buffer must be expensive. On the other hand: they host everything on AWS. Which Amazon owns. So while Twitch might make a loss the parent company might be perfectly happy making up the difference in AWS profits.

insane_dreamer 3y ago

Did they have a hiring spree during the pandemic like all the other tech companies and now returning to the mean?

coffeebeqn 3y ago
And record numbers of people looking for unhealthy para social content when stuck at home

nicce 3y ago

More profits. Simple as that.

minimaxir 3y ago
Even in late-stage capitalism, you do a 5-10% staff cut at most to trim the fat so-to-speak. A 35% cut indicates something with the business is fundamentally wrong. EDIT: I apologize for the completely unintentional derail.
- deleted 3y ago
  [deleted]
- niceice 3y ago
  What's "late-stage capitalism"?
  - dexwiz 3y ago
    Its modern jargon that refers to multinational, corporate focused, globalized markets. Its gone through a few definitions over the last century, but most recently its been used by the anti-work movement to deride a culture that has all but abandoned individual people in favor of the ultra wealthy. A culture where greed and money are the only virtues and all choices are driven by the bottom line. Jokes on them, that's how its always been.
    - throwboatyface 3y ago
      Farmers protested the enclosure of the commons, Luddites protested the industrial revolution, trade unionists protested for a 40 hour work week. It's not foolish to imagine the world could be better.
      - CamperBob2 3y ago
        You'd have to be brainwashed to think the world would be better without the industrial revolution. That's Unabomber territory. Ignorance alone wouldn't suffice... would it?
        throwboatyface 3y ago
        Would the world be better if there were incentives to promote skilled crafts instead of racing to the bottom to produce cheap shit at scale? I'm not saying to go back to the stone ages, but ultimately there have been movements to buy local and preserve traditional ways of crafting that are push back against industrialization.
    - no_wizard 3y ago
      This isn't really correct. While yes, so called "anti-work"[0] movement (or if you're from the early 2000s, the occupy wall street movement would be of similar philosphical values, for example) uses this term rather often, it derives from the work of the Ernest Mandel[1][2] based on his work in which he used the term to describe the latter stages of capitalism post WWII as he saw it, and how it inevitably would end up in deep inequality and power concentration, to paraphrase the thesis. As far as "its always been that way" goes, I can't speak for all of the past, but there are clear models in the present that show it doesn't have to be that way. Norway & Sweden come to mind, for example. [0]: Orewellian term at its best. The movement isn't actually anti work, much like luddites weren't anti technology. This label is attached by and large to people who are centered around ideas related to equitable wealth distribution in society & more worker rights, namely. They don't actually profess to be against work, as far as the movement goes. Individuals may vary. Never the less, its clear doublespeak. [1]: Notably, a socialist. Wrote the book Late Capitalism (https://www.goodreads.com/en/book/show/931838 https://www.goodreads.com/en/book/show/931838) [2]: The term was then popularized by Fredic Jameson, another socialist, though his critique was centered around the culture of post modernism and capitalism intersections: https://jacobin.com/2023/04/ernest-mandel-marixism-late-capitalism-postmodernism-socialism-economic-theory https://jacobin.com/2023/04/ernest-mandel-marixism-late-capi...
- chalsprhebaodu 3y ago
  [flagged]
  - minimaxir 3y ago
    Hence the implied "something with the business is fundamentally wrong".
  - iwontberude 3y ago
    How do you counter the argument by restating a premise of their argument? Are you implying Twitch is profitable because I'm pretty sure it is not.
- paulryanrogers 3y ago
  Maybe they're unwinding some over hiring from when interest rates were low.
- hot_gril 3y ago
  I can see 35% of the workforce at a company with a mature product like Twitch doing nothing, or working on random extra features that no longer make sense when interest rates go up. Idk if you'd call it fundamentally wrong, it made sense at a different time.

asdfasdflkj211 3y ago

You answered your own question. Twitch is solid and well-built. It doesn't need an army of well-paid engineers to maintain it and isn't seeing a great ROI on new features. Some companies repurpose all, many or some engineers when the spreadsheet says to, others fire them wholesale.

verdverm 3y ago
I found it to be rather buggy personally, it constantly freezes and needs to be refreshed
- mbrumlow 3y ago
  You might need to reapply your thermal paste and reseat your cup hat sink.
  - verdverm 3y ago
    It's consistently bad across multiple devices They need to upgrade their encoding / codec I actually did replace my liquid cooler and thermal paste on the beast machine, makes no difference
- nitwit005 3y ago
  The mobile app certainly has problems, but you don't need hundreds of engineers to squash the remaining bugs.
londons_explore 3y ago
Not many people realise this. Engineers build stuff. When your product is feature complete, you can get rid of most of them. Big tech companies keeping tens of thousands of engineers on staff despite their core product not seeing substantial changes for years are just wasting money.
- VirusNewbie 3y ago
  When you're at scale, a .5% increase in performance or decrease in utilization pays for a team of engineers. Being able to have one less SaaS product bill as well. Maybe Twitch isn't at that scale, but some companies certainly are.

bitmasher9 3y ago

1. I think the infrastructure costs is probably more than you think. It’s probably the single biggest line item. They have to encode every video stream to multiple formats, and then deliver it globally. 2. The core product is pretty mature. 3. Elon raised the bar for how large of a staff cut you can make. 4. Most of their revenue is split with content creators. 5. They lost their CEO about a year ago. New guy has to make his mark.

londons_explore 3y ago
> Elon raised the bar for how large of a staff cut you can make. Every member of staff fired now has a beef with the company, and being a social media company those staff will probably be big social media users with quite a lot of influence. Some may set up competitors or just badmouth you and your product. Elon discovered this the hard way.
- jjulius 3y ago
  >... and being a social media company those staff will probably be big social media users with quite a lot of influence. Genuinely curious to hear why you think this is the case. It's my anecdotal experience that the average social media company employee is just an average person like you and I, with an average number of followers.
- dangus 3y ago
  This is an “inside a bubble” take. The idea that software engineers at Twitter are influential on the platform is laughable. How many of these accounts are software engineers? https://en.wikipedia.org/wiki/List_of_most-followed_Twitter_accounts https://en.wikipedia.org/wiki/List_of_most-followed_Twitter_...
  - vineyardmike 3y ago
    There’s more employees than just SWEs. And you don’t need to be generally famous, you need influence in key niches. Twitter has historically hired people with large Twitter followings into roles that are more external. Some of them have been interviewed by the news media (eg The Verge). I’d be surprised if it didn’t have an impact on advertisers.

Brybry 3y ago

I think viewership peaked in 2021 and has been flat or down since then. [1][2][3] I know some of my friends watch Twitch less because the ad policy became toxic. [1] https://twitchtracker.com/statistics https://twitchtracker.com/statistics [2] https://sullygnome.com/longtermstats https://sullygnome.com/longtermstats [3] https://streamscharts.com/overview#:~:text=Twitch%20growth%20by%20week https://streamscharts.com/overview#:~:text=Twitch%20growth%2...

joegibbs 3y ago
What happened to the ad policy?
- echelon 3y ago
  You can't show female-presenting cleavage, for one. They change their "attire policy" on a near-weekly basis. Is it exploitative? Empowering? Toxic? Who knows! Everyone argues about everything. Twitch is ban happy with anything even remotely controversial. Things that can be suggestive or comments that can be interpreted as offensive will garner a ban. And they hate anything even remotely sex-related. Honestly, this stuff needs to move P2P. Platforms are indecisive and fickle. Just a month ago, they flip-flopped on their policy in just two days [1]. And it happens time and time again. I don't blame the ad networks (after all Twitter had all of the world government and news orgs plus sex and nudity). I blame the Twitch leadership. If you follow Twitch, the entire leadership is embroiled in the kind of drama you'd expect in a middle or high school. The community is moving to mostly Kick [2] and somewhat to YouTube Gaming. [1] https://decrypt.co/209998/twitch-walks-back-changes-after-surge-nudity-went-too-far https://decrypt.co/209998/twitch-walks-back-changes-after-su... [2] https://kick.com/ https://kick.com/
  - philwelch 3y ago
    > You can't show female-presenting cleavage, for one. They change their "attire policy" on a near-weekly basis…. And they hate anything even remotely sex-related. It seems incomplete to complain about this without also noting that Twitch (along with almost every other social media platform) has increasingly turned into a lead generation platform for OnlyFans. The rules keep changing because the OnlyFans streamers will find whatever line is drawn and absolutely spam the platform with whatever drives traffic to OF.

refulgentis 3y ago

It's happening at every tech company, over and over again, quietly and loudly. Unfortunately tech is probably the ur-contrarian and ur-isolated field, and from the reactions I see to this, I worry there will never be a systemic response by employees.

summerlight 3y ago

I guess Twitch is probably not in an area of profitable business given the infrastructure cost of video streaming services, especially in that it cannot enjoy all the cost optimization like Netflix/YouTube due to its nature of live streaming.

londons_explore 3y ago

> they take a large cut from subscribers I'm surprised they don't have a 'choose your own revshare' setting, allowing the creator choose how much to pay twitch. Obviously twitch will recommend more profitable creators, so you get a kind of 'race to the top', with creators offering twitch a larger and larger revshare, knowing that unless they do, their audience size will dwindle. It also encourages creators to come in from other platforms - if you already have an audience and just want to extract money from them, then you don't need to be in twitches recommendations and can choose a low revshare to milk the subscribers.

joebob42 3y ago
I think subscribers are sticky enough that this would pretty quickly drive revshare down. Especially when I imagine a sizable portion of revenue comes from the very biggest streamers, who may not need discovery from twitch at all and would then default to the lowest value. Like, this model has sort of flipped setup from what I'd think you want; the more successful you are the lower twitches cut. I suppose they could just make the minimum value 50% (iiuc this is the current value). But I'm still not sure how much it would help.

paxys 3y ago

It's just a brutal space to operate in. Even YouTube barely manages to break even.

glenngillen 3y ago

I’ve never been the target audience for this, so sharing anecdata with a sample size of 1 (well, 2 kids). But as I type this my kids are watching some streamer play minecraft on our TV. They’re watching it via YouTube though. I don’t know the last time they used Twitch, and I suspect the youngest doesn’t even know how to get there.

bjclark 3y ago

When twitch was acquired by Amazon the rumor was that they were the single biggest AWS customer and they were going to go out of business because they didn’t have the cash to pay the bills. It would have been bad for AWS and Amazon was investing in games. If you read between the lines that’s basically said in this article from that time. https://www.vox.com/2014/8/26/6067085/amazon-twitch-tv-video-games-live-streaming-league-of-legends-dota-2 https://www.vox.com/2014/8/26/6067085/amazon-twitch-tv-video...

firstSpeaker 3y ago
> single biggest AWS I think that has always been Amazon.com since it runs on AWS.
- snotrockets 3y ago
  Amazon doesn't run on AWS. There's separation between Amazon resources and AWS ones, even if much of the tech stack is shared.

apexalpha 3y ago

Most of their cost will be infrastructure. Encoding and serving multiple streams per channel to different devices with a low buffer must be expensive. On the other hand: they host everything on AWS. Which Amazon owns. So while Twitch might make a loss the parent company might be perfectly happy making up the difference in AWS profits.