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How is it possible for them not to be profitable? Don't they take a 50% cut on subs?
by wnevets 3y ago
How is it possible for them not to be profitable? Don't they take a 50% cut on subs?
- nine_zeros 3y agoBy spending too much on their execs
- lchengify 3y agoI am supremely curious about this myself. My guess would be their ad spend is bad in comparison to the other networks (Google, Facebook, TikTok). Could be because their audience isn't worth as much, could be because the ad formats are bad, could be because they can't get advertisers. But unless they are serving ads from Google's network, my guess is they are 4th place at best. As noted on other threads, their streaming infrastructure must be a burning dumpster fire of money. Live streaming is super hard since you can't edge cache it, and it requires actual hard computer engineering to make work. If a mere mortal company were to try to run a clone of Twitch on AWS, it would run out of money in days. It also likely uses the same hardware as other high-value products, such as AI.
- nathants 3y agokick.com is trying to run a clone of twitch on aws for a while now. too soon to tell.
- coffeebeqn 3y agoRunning on VC money? AWS sounds like a terrible place to host your live streaming infrastructure unless cost is irrelevant
- cavisne 3y agoNo they run on online casino money, the founders own Stake.com
- boneitis 3y agoI'm finding it curious that everybody here seems to be overlooking this. --- (I think the thread is too deep and preventing me from replying directly to child post) I posted here[0] a link to a video with pretty good commentary, speculating on and critiquing their strategy. To paraphrase it, they are not necessarily banking on operational costs being dwarfed by casino revenue in and of itself... but that Kick will yield exposure and drive more people to their gambling platform overall. He is also skeptical and fairly unconvinced that it'll be a slam dunk venture for them. [0] https://news.ycombinator.com/item?id=38935436 https://news.ycombinator.com/item?id=38935436
- cavisne 3y agoNeed to watch the video still but my assumption was since it’s illegal/frowned upon to advertise gambling, especially to minors. This is just an earth way to put ad… I mean streams of gambling in front of a large audience.
- boneitis 3y agoFor sure. That's most of what I meant to convey by linking the video; you get it :>)
- coffeebeqn 3y agoThanks for the context - that is a great revenue source if morally dubious
- eklitzke 3y agoI'm not an expert in this, but I don't think you'd be using similar hardware for video encoding and AI. Encoding uses a lot of compute, but it doesn't use much memory, whereas deep learning models (especially LLMs) use gobs of memory for both training and inference. If I had to guess, I'd speculate they're doing encoding on their Graviton ARM CPUs: https://community.arm.com/arm-community-blogs/b/infrastructure-solutions-blog/posts/reduce-h-265-high-res-encoding-costs-by-over-80-with-aws-graviton2-1207706725 https://community.arm.com/arm-community-blogs/b/infrastructu...
- dathinab 3y agoyes encoders are special purpose hardware mostly unrelated to AI for consumers they tend to overlap because they way to get a good encode is to buy a good graphics card which might be more expensive due to AI and before that crypto through on server center there are special purpose encode PCIe cards I think, through the ARM CPUs might also be an option as a side note because people mix it up all the time Twitch is owned by Amazone but a distinct legal entity which has to pay Amazone for any AWS/Server stuff they use in the same way as other customer
- pygNdoge 3y ago[dead]
- ctroein89 3y agoVideo is expensive, and streamers don’t like ads. Amazon has for years been saying that they think that Twitch is under monetized. In their minds, 20% of watch time could be ads, just like regular TV. Streamers don’t like ads: it kills the vibe when your audience gets a 2 minute timeout. So streamers aren’t running enough ad breaks, and try to support themselves via memberships, merch and other alternative monetization methods. And for some, Twitch is only advertising for the real money-maker on another site. So Amazon doesn’t get the ad money they think they should get, and they only get a cut of memberships. So then it’s a question of how many servers and engineers are needed to support Twitch, because that will determine profitability.
- itsTyrion 3y agoAssuming 1k viewers, 2/3 of them watching on 'source' quality (6 mbps). In that case, a 4h stream nets 7.2TB! of egress to end users on highest quality on one channel alone.
- prox 3y agoIt’s too bad they are so unimaginative when it comes to that. I mean at the very least they should hand controls to the streamer to run an ad: right now it’s the algorithm that does it. Also they should primarily look at other ways to monetize. Subs are still the best way, but not everyone has that kind of money. One other big problem is that there former heads just didn’t get streamers and they ran a lot of big ones out of the building. One streamer with a crazy amount of paid members was treated poorly in an amateurish way. I think they have new management now which at least seem to be a bit more in tune with what streamers needs are and some of the painpoints.
- pclmulqdq 3y agoThey do give streamers a button to run an ad break, but they force ads on you if you don't run them often enough. That is very common for many streamers, because the ad breaks hit a large fraction of your viewers and it sort of kills the conversation for everyone.
- 3y ago
- darkerside 3y agoI wonder how much AWS gouges them on price
- TheRealPomax 3y agoLive streaming 1080p 60fps video to a channel with even just a few hundred viewers is a staggering amount of data that you need to push out. Multiply that by thousands of simultaneous streams, and the numbers don't look good. Because even though "Amazon" might be able to afford to send out all that data, "a subdivision owned by Amazon" still has to balance the budget and show that it can cover the cost for its slice of the pie... and Twitch simply can't.
- wnevets 3y ago> Live streaming 1080p 60fps video to a channel with even just a few hundred viewers I've been in streams with less than 100 viewers and seen hundreds of dollars in bits & gifted subs being spent in a single hype train. Are those really unprofitable for Twitch?
- Sohcahtoa82 3y agoWhen someone buys a sub ($5-25 depending on tier), Twitch gets half the money. Bits are a little more complicated. Donators have to buy bits ahead of time and then donate them. 100 bits is worth $1 to a streamer. But 100 bits will cost between $1.18 and $1.26 depending on how many bits you buy at once. Buying a larger block means paying a little less. (Side note: Once the streamer has received the bits, they can't be taken back, even if the credit card charge that bought the bits is reversed due to a fraud claim) If a streamer with <100 viewers was getting hundreds of dollars in a single hype train, then either that streamer is very lucky and has a rich viewer that doesn't mind throwing around money, or I'd suspect something fishy is going on. ie, bits being bought with stolen credit cards, or the whole thing is a money laundering scheme.
- dathinab 3y agoTL;DR: more operation cost then it seems, limited AD income, many streamer on which they lose money, increasingly more competition with "unfair advantage" (second platform effect, YT/TickTock; unethical content Kik(gambling); unethical monetization strategies TickTock). operating a reasonable reliable live streaming service is quite expensive and Twitch is not Amazone. Sure it's owned by it but it still has to buy all computation resources from Amazone, for similar prices then some of the competition like Kick (which deeply interwinded with gambling streams which are profitable but ethically and legally problematic and hence banned on Twitch) and while they do take a cut this is only profitable if a streamer gets enough subs/bits etc. but most streamers on twitch do not get that, but might still have people watching across two continents+. E.g. having less then 50 viewers but viewers across 2 continents with a stream earning less 1€ income (not profit) per-hour in average isn't that rare So the "big streamers" would need to subvention the cost of Twitch being free for streamers, which isn't easy. That some people do use Twitch as a form of marketing platform to goat people on other platforms and then there earn money from then doesn't help (and given how little twitch does against that but often simply could I'm seriously wondering if there is some internal employee corruption scandal to be uncovered). Then there is another issue Twitch has compared to YT, it ADs are worth way less. Actually often Twitch doesn't even get enough ADs bought out so that some people in some regions sometimes see no or hardly any ADs (no one bought any) or ADs repeat too often... Lastly and maybe for some people surprisingly given how some tech channels love to blow up any small negative news about twitch it's trying to act "reasonable ethically", i.e. not "oh they are grate people ethically" but "they have limits on how evil they act which are more then the law requires" ethically. You can see this if you compare the usage of dark patterns and highly addictive feedback loops between Twitch and TickTock. The later maxes out everything they can wrt. dark patterns which have addictive effects (at least for vulnerable people) and obfuscate how much money you spend. While Twitch, well does not do so. Oh and probably there was some mismanagement, not now but a few years ago.
- whatyesaid 3y agoHollywood accounting. First off, remember they're paying themselves (AWS). Large streams are more expensive but those get the subs. Ad revenues they are also splitting but they play 3 minutes of ads that interrupts the entire content every 10 minutes.
- dathinab 3y agoJust because Amazone owns Twitch doesn't mean they pay themself, they are still two distinct legal entities and Twitch is competing with other non Amazone owned companies (e.g. Kick) for the same resources. If Twitter would not pay Amazone I think it might even somewhat fall under competitive distortion/unfair competition. Large steams do amortize cost while the bandwidth cost is somewhat scaling per viewer there are other cost which scale per used resolution and per region the stream is streamed to. So on a per-view bases large streams are often not the most expensive. But very small streams with viewers across continents have the highest per-view cost. AD revenue is split but the main problem is Twitch ADs are not worth much and a bought way to little, often leading to no ADs playing at all for many (non US) regions. >they play 3 minutes of ads that interrupts the entire content every 10 minutes. They do not (typo?), it's depending on the streamers setup but ADs are normally more in the 3min per hour basis which is fine to be honest. There are sometimes some additional banner ads but they don't cover the content, don't "play" and are not that disruptive. And there is Twitch Turbo which disables all ADs but streamers still get the AD money. Through that isn't worth it's money for a lot of people.
- scarface_74 3y ago> If Twitter would not pay Amazone I think it might even somewhat fall under competitive distortion/unfair competition. It’s “unfair competition” for a company to use its own servers to host its own business?
- k12sosse 3y agoMore like Google sweetening the pot for Play store with ad sale discounts, less like Microsoft having the audacity to bundle IE with the OS. If AWS was Twitch Web Services it would be OK. But Amazon is not Twitch so it is anticompetitive.