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Amazon Paid Almost $1 Billion for Twitch in 2014. It's Still Losing Money. (msn.com) 72

Posted by msmash from the closer-look dept.
Amazon paid nearly $1 billion to acquire the live-video startup Twitch Interactive in 2014. A decade later, the retail giant has received little financial return from one of its bigger acquisitions. WSJ: Known for hourslong broadcasts of videogame play, Twitch remains unprofitable despite periods of explosive popularity, according to current and former employees knowledgeable about its finances. Documents reviewed by The Wall Street Journal show Twitch's biggest-paying users are opening their wallets less, and third-party data reflect that growth in new users and engagement has slowed.

Following two rounds of layoffs in the past year, staffers are concerned that a third round could come this fall following an annual operational review, according to people familiar with the matter. Amazon Chief Executive Andy Jassy, who took over in 2021, has led a profitability review at the company and shown little tolerance for unprofitable businesses. Insiders said they worry Twitch is at risk of becoming what they called a "zombie brand" at Amazon -- internal projects or acquisitions that have been sidelined because they haven't lived up to expectations. These staffers pointed to book-review app Goodreads, online task finder Mechanical Turk and discount website Woot.
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Amazon Paid Almost $1 Billion for Twitch in 2014. It's Still Losing Money. More

Amazon Paid Almost $1 Billion for Twitch in 2014. It's Still Losing Money.

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  • Unprofitable or badly run? (Score:5, Insightful)

    by Malggi ( 791997 ) on Monday July 29, 2024 @09:08AM (#64663662)

    I can't help but wonder if some of these brands really are unprofitable, or just badly run. I used to go to woot.com every day before Amazon bought it and ruined it, now going to meh.com is my daily habit instead. It seems like meh.com is profitable, so I'm assuming woot.com still could be too... if it was better run.

    • Can be both and also somewhat by design, Twitch is still the top game-streaming platform with no real competition on the horizon so it's probably viewed as a loss leader, just a part of the Amazon/AWS pie of money. If they were shut down Twitch due to lack of profits they would simply cede that audiend to Youtube/Kick or whomever else, the audience doesn't dissapear so keep their eyeballs on you and sort out how to profit later.

      I also had heard from some streamers that (a href="https://aws.amazon.com/ivs/"

      • The new platform for streaming, is: TickTock.
        And that is why big US internet companies try to lobby, sabotage it etc. to shut it down.

        It simply is a Facebook clone, but better. With streaming (and hosting the streams) and a market place that actually works, with payment integrated.

        And integrated into many many asian online market places, chat applications and payment systems.

        No such thing in the USA. That is why they want it dead.

        • Re: (Score:2)

          by EvilSS ( 557649 )
          TicTok isn't easy to live stream gaming on if you are not streaming mobile games. For PC streaming you need to be 18 or older (no 13+ like on Twitch), in the US, and have at least 1000 followers, and that's just for using their own PC software. If you want to use OBS, you need a stream key. Those are only available to people in the US right now unless you have good connections inside TikTok, and you need to be repped by a partner agency.

          • Re: (Score:3)

            by bn-7bc ( 909819 )
            False i 'm in norway and can use mt stream key ro brodcast tomrwich via obs at at least i could a few months ago,. I hovever don't have av1 streaming for 2 reasons 1 (on my end ) no gpu with av1 support ( fix get a cheap inrel arc as second gpu exclusively for av1 encoding) 2: not being part of the beta so I'll have to wate for ga. Oh yea av1 this vill cut down on twitches cost . Less mpeg licensing and streamers being able to stram at multiple resolusions from theit end so twitch has less transcoding

          • That is most likely an US requirement.

            Most TikTok'ers I see are certainly below 18.

        • TikTok is it's own thing but it is not Twitch and not a replacement for people who want Twitch style content. Twitch streamers will clip onto content but they are not doing 4-8 hour streams on TikTok with the audience retention style Twitch has.

          Maybe TikTok want to muscle into that category but they have a long ways to go, Twitch shrugged off YouTube's attempt at competing with them, Kick doesn't seem to be making inroads.

          Same issue with Twitter, the audience effect is just huge on these places.

          • but they are not doing 4-8 hour streams on TikTok with the audience retention style Twitch has.

            Lol, they do!

            That is the only thing I use TickTock for.
            Watching video music stream battles.

            I can search you some when I have more time ...

            • Maybe the tides have shifte but Twitch still has like 100k streamers and 3 million daily viewers of said streams with high retention rates, subscriptions, etc.

              Maybe TikTok is catching up in that audience, especially for the younger generations. Especially in the game streaming section which is the Twitch bread-n-butter opertation.

              • The two companies have different ideas what they are doing.

                Twitch is mostly a streaming platform.

                TikTok is "a better facebook", with integrated market place and payment. And: hobby contributors, aka "digital artists" actually earn money.

                Despite the fact that FB is operating internationally, it is basically owned buy USA users ... especially as it is blocked in China.

                TikTok is seriously operating internationally, and mostly in Asia. Basically everyone who has something to sell is on TikTok. Does not matter i

                • TikTok is TikTok, it is not switch

                  That's my point, Twitch and TikTok are different platforms.

                  The idea that China is influencing American people to vote x or y: makes no sense at all.

                  If this is true then it's also true for Facebook, Twitter and all social media so I better not hear anything about Section 230 and everything else around political social media ever again and I need all discussion over the past 9 years to be discarded. Agree?

                  Will not work. America has 430million citizens. Asia has 4(?) billion. No one really cares if you guys jump out of it.

                  The CCCP does.

                  • The CCCP does.

                    Most certainly not. China does not care about USA, except for the fact that USA has over 100 airbases in strike range of the Chinese coast. AND: China has nothing like that.

                    Anyway, was not the point.

                    The point is: there is no propaganda on TikTok. At least not for foreigners. Except you consider an advert of "BYD electric cars" as propaganda pro China.

                    The other point was streaming. As I see live streams that are "recorded" on youtube, coming from TikTok originally, and you seem not to do that .

    • I think twitch got cutout.

      The model of twitch is essentially that if people make a living of twitch they can skim a percentage of their income. And when you times that the number of streamer it is profitable.

      The problem is that most of the full time livre streamer income does not come through twitch. a significant fraction comes theough streamelement, through patreon and theough tangia.

      So twitch doesnt get their cut as big as they thought. That's why they started to push a lot more ads recently.
      May e they s

    • Re:Unprofitable or badly run? (Score:5, Interesting)

      by snowshovelboy ( 242280 ) on Monday July 29, 2024 @09:59AM (#64663784)

      Or is it a victim of intercompany billing? Look how profitable AWS is. Does twitch pay market rate for cloud services?

      • Re: Unprofitable or badly run? (Score:4, Insightful)

        by godrik ( 1287354 ) on Monday July 29, 2024 @11:02AM (#64663944)

        That is the real question I think.
        Twitch stores lots of old vods and that can get expensive. and they burn tons of bandwidth. At could rate, that would be a lot.

        My guess is Twitch is losing money because ec2 is making a killing of twitch. It enables twitch to go "look we losing money so more ads" while looking like "we really believe your business potential that we ok losong money on you"

    • Re: (Score:3)

      by AmiMoJo ( 196126 )

      Ads don't pay much, and the have issues with content on many streams.

      Streamers need to get paid to do it full time. Unlike YouTube where it can be done part time as a hobby, to gain any traction Twitch needs streamers to be working regular hours and producing a constant stream of new content.

      Streaming is bandwidth intensive. CDNs are less effective with live content, as opposed to recorded videos that can get pushed out for storage within an ISP's network.

      It's a very cost sensitive product because many of t

      • Ads do not pay on individual levels but do in aggregate. A single decent overlay/interstitial will cost $50c-5 per impression, for a stream of a few thousand people every 10 minutes, that is a chunk of money. Itâ(TM)s not unheard of for streamers to also get $1-10k per in-stream ad.

        Problem is cloud bandwidth. If you insist to be purely cloud when you are at the scale of running your own infra, you are overpaying by several orders of magnitude annually. Video streaming is bandwidth intensive, but bandwi

      • It's also highly stressful on youtube also. I think too many viewers think it's just a fun thing that people do, and then post some hurtful comment about "how could you be so stupid, the key to the door was on the table you ran past!" I've seen some content creators that had their own personal channel alongside their professional one, then had to delete the personal channel because they were sick of the extra abuse that came without the extra pay. Twitch seems to be just streaming, whereas Youtube is more

    • It sounds like they still do Adaptive Bitrate Streaming on a per-connection basis rather than pooling similar users and flinging multiple copies of the same UDP packet which puts a big burden on their in-house infrastructure. If they are not doing everything technologically that they can to cut their infrastructure costs, then I would say "badly run".
    • The size of the management's bonuses will settle that question. There are definitely people who are profiting from Twitch.

  • Twitch is exploitative, that's why (Score:5, Insightful)

    by 2TecTom ( 311314 ) on Monday July 29, 2024 @09:25AM (#64663708) Homepage Journal

    They only pay the top streamers who bring in ad revenue, their business model is to overcharge and cheat their streamers and views

    I stream everyday and have never made a single cent, most streamers never will

    these people are just using people in order to get free content they resell for profit, it's a classist scam, just like Google Adsense and Wordpress.com

    • I wonder where they are spending all the money. Bandwidth isn't cheap, but they do seem to run more ads than Youtube.

    • ```
      I stream everyday and have never made a single cent, most streamers never will ... it's a classist scam
      ```

      I believe you, but can you explain the psychology of why you would give these bastards a substantial percentage of your useful productive life?

      It sounds like voluntary enslavement but I am probably missing something.

    • Re: (Score:2)

      by Mordain ( 204988 )

      I feel like they were really resentful that the largest streamers were able to make a ton of money off of the platform while they haven't, and the changes they have made have killed off any chance for newer streamers to earn anything and keep the platform alive.

    • Re: (Score:3)

      by EvilSS ( 557649 )

      I stream everyday and have never made a single cent, most streamers never will

      Twitch affiliate gives you access to subs. Yes the 50/50 split isn't great but you would get revenue. Affiliate is stupid easy to get to (50 followers/8 hours streaming/stream 7 different days/average 3 concurrent viewers). If you are streaming every day and can't make affiliate that sounds more like a you issue than a Twitch issue.

      • Re: (Score:2)

        by 2TecTom ( 311314 )

        and do you have any idea what a low level affiliate 'earns' or the min payouts?

        anyone can find my stream i'm a competitive fortnite player and I've ranked as high as top 200 on fortnite tracker, consistently top 500 solos, both ZBM and old skool

        • Re: (Score:3)

          by EvilSS ( 557649 )
          Yes, actually I do. If you are not getting enough subs to reach the minimum payout, that's on you not Twitch. And being good at a game (although I'm not sure those numbers are really all that brag worthy) doesn't necessarily make you a good streamer.

          • Re: (Score:2)

            by 2TecTom ( 311314 )

            more bs, how many people don't ever make it, how many never make a penny?

            another corporate troll

            were you raised to be insulting and abusive in public or did you come up with that on your own?

            you prob cheat too

            • Re: (Score:2)

              by EvilSS ( 557649 )
              You are not owed an income by Twitch. That's up to you. Twitch gives you a platform, for free by the way, and it's up to you to build your audience. You are the one that went into this thinking you would make it. Yes, most don't. That's life. At least they give you a platform so you can take your shot.

              And with your attitude I can see why your streaming "career" is a failure. You sound like a bitter asshole and I bet it shows in your streams too.

              • Re: (Score:2)

                by 2TecTom ( 311314 )

                Every organization has an obligation to be ethical as do individuals and this is codified into laws and regulations.

                Overcharging people, underpaying people, deceit, manipulation, all are unethical and illegal; typical pseudo-conservative giving the rich and powerful entitled upper class a free ride based on irresponsibility and how they unethically exploit money from the rest of us

                Being realistic is hardy bitter but I can see why you need to characterize it so. When one cannot attack the argument, people re

                • Re: (Score:2)

                  by EvilSS ( 557649 )

                  Overcharging people, underpaying people, deceit, manipulation, all are unethical and illegal; typical pseudo-conservative giving the rich and powerful entitled upper class a free ride based on irresponsibility and how they unethically exploit money from the rest of us

                  How is Twitch doing any of that?

                  . When one cannot attack the argument, people resort to attacking the character of their 'opponent'. I don't need to go down to that level

                  Yet you did exactly that, and you did it first:

                  another corporate troll

                  were you raised to be insulting and abusive in public or did you come up with that on your own?

                  you prob cheat too

                  I'm willing to discuss the issue based on the facts of the matter.

                  No, you are not. You seem to just want to blame everyone but yourself for not being a success on Twitch.

                  • Re: (Score:2)

                    by 2TecTom ( 311314 )

                    lol, obviously by generating ad revenues and then not sharing any of that revenue with the vast majority of content creators

                    sure, a few exceptions make some money but most don't

                    even more insults and pejorative lanquage from you sure speaks volumes about you and your motives

                    just saying

                  • Re: (Score:2)

                    by 2TecTom ( 311314 )

                    great, now I know yet another foe ...

                    the foe of my friend is my foe too

          • Re: (Score:2)

            by 2TecTom ( 311314 )

            just look at the lack of manners

            speaks volumes

    • Never made a cent streaming while streaming everyday? You must streaming to yourself.

      Many streams with 10 people on it have people buy subs to skip the ads. or have twitch premium (whatever it is called) which has a kickback to the streamer.
      There are plenty of streams with a hundred people on it which make new subs about every stream.

      • Re: (Score:2)

        by 2TecTom ( 311314 )

        and none of them are earning any real revenue despite producing hours of content

        go away troll

        • The claim I was rebukking was "I stream for hours and never made a cent". Not "you can stream for 6 people and make a living".

          After that I don't know how you define real revenue. But there are plenty of streamers who do two nights a week for a couple hundred people. Recut some of the vods for youtube and seem to be making about 500-1000 a month for games and videos they'd be doing anyway.

          And they might get a sponsor from time to time. Maybe once a year. Probably make a thousand here as well.

          That's not a

          • Re: (Score:2)

            by 2TecTom ( 311314 )

            no, it's not really, it's slave wages at best

            as well, exceptions only serve to prove a rule

            like I said, most streamers will never see a penny and all these types of services are scams designed to cheat and steal from content creators

            classism in action

    • Re: (Score:1)

      by kc-guy ( 1108521 )
      Don't forget Facebook, which has never paid for content, and is extremely slow at removing viral content from other providers, taking just long enough to process the request that they still milk it for all the views at peak before removing it when it stops driving engagement.

  • Good, kill it (Score:2, Flamebait)

    by argStyopa ( 232550 )

    It IS worthless.

    1100 employees to be a free-promo channel for youtubers and some games that don't bother to have active marketing depts. What they pay out is rather absurd, really, Twitch is merely an example of the vapid advertising ecosystem that SOMEDAY, SOMEONE will look at and realize the Emperor really has no clothes and "why the fuck are we paying that much for ads there"?

    # of viewers Estimated income
    20 average viewers per stream $200â"$400 per month
    50 average viewers per stream $500

    • At this point twitch has the better streaming platform. I do not think it is worthless. It provides lots of value to its users, both streamers and viewers.

      No one expects to make a living of the ads and sub alone. it is kuste one of the revenue stream for the streamers. And from twitch perspective, as long as that is profitable. it is fine.

      Plenty of people are making decent money off streaming business, which includes direct sub revenue as one of the income streams

    • Amen! Hard to imagine anyone having the time to watch someone else play video games for hours. If they are not on tiktok, then tiktok will certainly have ruined any long attention span they have.
  • Comment removed based on user account deletion

  • Send three thousand emails.

    That's all it would take for Amazon to pocket one billion in pure profit. That would increase their net earnings by almost 3%, and it wouldn't cost them a cent.

    Now, why would a publicly-traded company leave ten figures on the table?

    Seems strange, doesn't it? Are you an Amazon shareholder? That's your money they're leaving behind.

    In fact they've been doing it for 13 years.

  • If your making hands over fist you need a lossing company to offset gains.

  • Doesn't surprise me. They were on a lost position the moment Amazon took over and they started baking ads into the video stream making the streams unwatchable.

    • I watch some streams on twitch and even without subs it is not too bad. It can depend on streams, streamers can jack yp the ads a lot if they want. I think the low ad rate is one long (45 sec) one short (20sec) every hour.

  • "A fool and their money are soon parted."

    https://www.phrases.org.uk/mea... [phrases.org.uk]

  • Is that what the kids call peeing? I'm so high, I have no idea what's going on.

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