Twitch: A Revolution of Live Streaming

twitch

Founded in 2011, Twitch is a live streaming platform which allows people to broadcast video games, music and other creative content. The website allows streamers to chat with viewers during the live stream, giving the viewer a unique opportunity to communicate with some of their favourite personalities. If you aren’t a millennial or avid video game enthusiast, there is a fair chance you have never even heard of Twitch. However, key marketing metrics show that the streaming giant is continually on the rise, expanding its audience more and more each day.

Marketing Metrics – what does Twitch measure?

Marketing metrics are an important set of measures which help marketers to quantify and analyse their marketing performance. In this instance, Twitch is an online-based company which places a focus on dominating a particular set of demographics, which is instrumental in their continued success. One of the main marketing metrics which is crucial to Twitch is customer profiling. Customer profiling has been shown to determine patterns and trends regarding customer segments, allowing companies to more efficiently allocate capital and resources. Alongside customer profiling, behavioural metrics such as market share and sales are important, particularly in a market with giant competitors such as Youtube. Additionally, the number of visitors to the website is an important indication of how many people view their advertisements and marketing campaigns, which are fundamental in generating revenue.

Customer profile metrics

The targeting of Twitch is specifically aimed at teenagers and young adults who have an interest in video games and streamed, interactive content. According to Quantcast, Twitch reaches an audience mainly comprised of:

  • Males
  • People aged from 18-34
  • Lower income earners (<$50,000)
  • People without kids
  • People living in America

Quantcast was able to compile a more specific set of data derived from surveys and advertising such as political preference, general interests, favourite shopping brands and media interests. This information shows that Twitch is successful in marketing toward their target audience.

Twitch’s market share

In 2015, it was reported that the video game content industry was worth a whopping $3.8 billion. From this figure, Twitch earns the largest amount of revenue, claiming 43% of the market share, working out to be roughly $1.6 billion. Closely behind this figure is Youtube, who holds 36% of the market share. According to a SuperData report, Youtube actually has MORE viewers than Twitch, holding 72% of the viewer base. These figures are quite interesting, it could insinuate that Twitch’s viewer base are comprised of hardcore gamers who are willing to spend more money, whilst the Youtube viewer-base is made up of mostly casual gamers who are less inclined to spend money. This data clearly shows that Twitch is the industry leader in video game content, despite having a lower viewer base than its competitors.

Twitch’s sales

Another behavioural marketing metric is unit sales, which Twitch does a little differently to other companies. Twitch generates revenue through the ‘Twitch Partner Program’ and ‘Twitch Turbo’. Twitch Turbo is a monthly subscription which allows benefits such as no ads and a customised chat experience. The Twitch Partner Program has been a large success, with over 15,000 members being official partners of twitch. Twitch takes a percentage of the revenue which is made from streamers through advertising and individual channel subscriptions. Viewers can subscribe to channels for $4.99/month, from which Twitch take an unidentified percentage. It is in their best interest to determine which channels are popular and promote them to generate a larger number of sales.

The Global Reach of Twitch

As advertising is essential to revenue generation, it is important for Twitch to ascertain how many people watch their live streams. On their website, they state that there are:

  • 9.7 million daily active users
  • 2+ million unique streamers per month
  • 2+ million peak concurrent sitewide viewers
  • 106 minutes watched per person per day

On top of this, recent data has shown that Twitch has generated almost 15 million unique viewers over the past month:

twitch-viewership

Source: Quantcast, 2016.

The more people that visit certain streams, the more money Twitch can make from advertising and subscriptions. It is important to keep track of viewers because they can charge companies more for advertising, especially on channels which have a large number of viewers.

twitch-growth

Source: Twitch, 2015.

Is it sustainable?

Even though Twitch was acquired by Amazon in 2014, it won’t take long for industry giants such as Youtube to adapt to this market with their endless resources. For now, Twitch is successful in having a larger portion of the market share and dominating their demographic. With millions of unique viewers watching streams on Twitch everyday, it is clear that this once-niche market is set on becoming a global phenomenon.

Written by James Mier – 216177105 (jmier94)

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