Although Twitch is worth over $45 Billion, they are still not profitable... Why is that?
Streaming is one of the biggest forms of entertainment today. What started as a niche has now become the main ‘stream’ (funny joke ik). Many influencers are also streamers and broadcast their content on the well-known gaming streaming platform ‘Twitch’, which is now also used for other types of content besides gaming.
How is the billion-dollar platform doing? Despite the high number of users, the company still doesn't appear to be profitable... But why is that?
Why Is Twitch Still Not Profitable
In a live stream, Twitch CEO Dan Clancy told the truth about the platform’s financial situation.
“I’ll be blunt: We aren’t profitable at this point.”
This admission sheds light on a long-standing challenge for Twitch – turning a profit.
The financial struggle is not a recent development but has been consistent in Twitch's history. Even as the platform evolved, the core issue remained: the extreme costs that come with live-streaming.
With 1.3 million streamers going live daily, each demanding significant infrastructure and bandwidth resources, expenses quickly pile up.Twitch Prime, included with Amazon Prime, adds to Twitch's money problems as it likely costs Amazon more than it makes. But changing Twitch Prime subscriptions, on the other hand, would reduce the streamers' earnings, adding to the financial pressure.
What is keeping Twitch alive right now is their users' loyalty. Over the years, the platform has built up a community of creators and viewers who have adjusted their content to fit Twitch's infrastructure. This is an advantage that they have over their competitors, Kick and YouTube.
But instead of keeping their creators, many are actually leaving the platform. This is in part due to Twitch increasing their revenue share with creators to make more profit, which upset many.
Before the most recent creator backlash, Twitch cut revenue share from 70/30 to 50/50, fired a quarter of their staff and their CEO jumped ship. Now @KickStreamsLive is poaching their biggest streamers. They're fuckin' DONE. Amazon will sell it off or shut it down IMHO. pic.twitter.com/SQlsEgEqEq
— Kneon (@Kneon) June 17, 2023
Recently, Twitch also increased ads, even though viewers obviously don't like that, and stopped supporting markets like South Korea due to high costs.
Twitch's future still depends on how these changes pan out. They need to balance making money with keeping their users happy. And with a platform as big as Twitch, that will continue to be a tricky task.
