Bloomberg Businessweek

(Steven Felgate) #1




Edited by
James E. Ellis

○ It wants to turn its Twitch
online hangout for avid gamers
into a broader video service





YouTube has become synonymous with online video
and the lucrative advertising that it commands. Inc.’s Twitch streaming site is the go-to
place for the much smaller audience of video gam-
ing enthusiasts. Now, in a bid to grab a larger slice
of the online advertising pie, Amazon has decided
to aggressively broaden the programming on Twitch
to take on its video rival.
Amazon in recent months has been pursuing
exclusive livestreaming deals with dozens of popu-
lar media companies and personalities, many with
large followings on YouTube. Twitch isofering min-
imum guarantees of as much as a few million dol-
lars a year, as well as a share of future advertising
sales and subscription revenue, according to several
people who’ve been contacted by Twitch.
The company has approached everyone from
lifestyle inluencer Gigi Gorgeous to actor Will
Smith about streaming live. While some talent has
resisted a few of Amazon’s terms, such as a mini-
mum number of hours of livestreaming per week, a
few deals have closed. Tanner Braungardt, a prank-
ster from Kansas with 4 million subscribers on
YouTube, for instance, has also signed onto Twitch.
And the National Basketball Association struck a
deal to stream minor league games on the service.
“There will be a steady drumbeat of lots of new
content we’re bringing on,” says Michael Aragon,
Twitch Interactive Inc.’s senior vice president of
content. “We’re growing well, and that makes us
an attractive destination for people looking to do
new things in live, interactive entertainment.”

For now, it’s a David vs. Goliath battle. YouTube,
the largest advertising-supported video site in the
world, has about 1.9 billion monthly viewers;
Twitch gets about 15 million a day. But the Amazon
unit gives creators multiple ways of making money,
including paid subscriptions (a feature YouTube
added in response), and ofers advertisers the
appeal of a live, engaged audience. Amazon, which
saw its ad sales in the irst quarter exceed $2 bil-
lion for the irst time mostly by selling “sponsored
products” slots during product searches, analysts
estimate, has already become a credible contender
in online advertising to Google and Facebook Inc.
At a recent staf meeting, Twitch Chief Executive
Oicer Emmett Shear set a target of $1 billion in ad
sales for Twitch, according to three people present.
That’s more than double its current sales. Twitch’s
key advantage, besides being live, is its popularity
among young men who tend to be resistant to ads.
The average Twitch user has stopped paying for
cable TV and employs technology to block adver-
tising across the internet. But hundreds of thou-
sands of these hard-to-reach viewers tune in daily
to watch top video game streamers, such as Ninja,
Twitch’s biggest star.
YouTube has tried to blunt Twitch’s eforts by
ofering big payments to some of its top creators if
they agree not to make exclusive deals with other
sites. “YouTube is pretty nervous,” says Chad Stoller,
chief innovation oicer at media agency UM Global.
YouTube declined to comment for this story.
Rai Fine, who with his brother runs some of the
biggest channels on YouTube through their Fine
Brothers Entertainment, has had discussions with
Twitch oicials about making original series. Fine
says he can’t imagine abandoning YouTube, but
Twitch might ofer his company a better home for
live programming—and more money. “Twitch has
a way to be not a killer, but a competitor to what
YouTube does,” he says.
The vast majority of Twitch’s visitors come to
watch others play video games. While e-sports are
booming, many marketers still associate gaming
with nerds who live in their parents’ basements.
Twitch didn’t let users post videos that weren’t
gaming-related when Amazon paid almost $1 bil-
lion for the company in 2014. A year later, Amazon
introduced Twitch Creative, which helped non-
gamers such as chefs and artists to stream live.
The site has since hosted livestream marathons
of old episodes of Saturday Night Live and celeb-
rity chef Julia Child, plus some live sports. There’s
no better sign of Twitch’s interest in nongaming
video than its popular chef streamer Christine, a
32-year-old Californian who ilms herself baking

Bloomberg Businessweek August 20, 2018
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