The story of how Twitch reportedly became a $1 billion target for Google is a testament to the Silicon Valley virtues of continuous iteration, integration and starting early. Twitch sprung out of Justin.tv, which began life as a ‘lifecasting’ platform through which people would broadcast their day-to-day lives. Starting in 2007, one of the founders, Justin Kan, would wear a camera attached to a baseball cap 24/7, and the content would be streamed online via a laptop backpack system designed by co-founder Kyle Vogt.
While the concept caught on and received national news coverage in the US, ‘lifecasting’ in its purest form was never going to be sustainable, as Chase (just Chase), a spokesperson for Twitch, explained to VAN, “The reality is that a person’s life being filmed 24 hours a day features a lot of sleep, eating and so there’s a lot of downtime. We found that people wanted to broadcast their own lives, so the idea was to create tools so anyone could broadcast on Justin.tv. Soon people started broadcasting everything from sporting events and weddings, right through to catcams.”
Right Place, Right Time
But one thing they didn’t expect was the rapid growth of video game-related streaming. Emmett Shear, one of the co-founders of Justin.tv, was an avid Starcraft II player, so he was watching a lot of video game content already. He saw that that part of the site was growing rapidly and organically, and soon it was breaking pretty much every threshold they set for it, so they decided that gaming should be spun off into its own property. Twitch launched in 2011 and 3.2 million users were ported over from Justin.tv to the new service. Today they that audience has grown to 45 million unique users per month.
Monetising that audience is the job of Scott Newton, VP of Revenue at Twitch. Newton explained to VAN that the rise of online video wasn’t the only thing that enabled Twitch to grow. At the same time a concurrent shift was taking place in the gaming world. “Before games had a relatively short shelf-life, so you would buy a game, play your way through it, and then you’d reach an end point, so there wasn’t much longevity there. However, since games became a multiplayer, competitive experiences, it has really increased the longevity and made games far more watchable from a spectator perspective.”
The result is that Twitch has become the go-to platform for pretty much anyone with an interest in gaming, ranging from the average gamer right through to the corporate powerhouses like Sony, Microsoft and Electronic Arts*.
The big tipping point for Twitch was when Microsoft and Sony integrated Twitch into their consoles, which enabled people to broadcast to Twitch with the click of a button. Now, with the latest Microsoft console, the Xbox One, all you have to do is say ‘Xbox broadcast’ to start broadcasting, and it’s equally easy to start broadcasting via Sony’s PS4.
While Twitch aren’t commenting on the acquisition rumours, it’s hard to see how Google wouldn’t want to buy them. Twitch is a highly scalable platform that has managed deeply embed itself in the games industry, in a similar way to how YouTube has dominated online video. If you want to live stream to gaming audiences, Twitch is the place to do it if you want reach a significant number of people. More importantly, buying Twitch would enable Google to generate significant ad revenue from games content that other companies — often rivals — have funded.
Direct Sales are Delivering
Newton says that for the first few years the company was highly product-focused, so advertising was typically outsourced to third party networks and exchanges. However, while the automated platform model works for them on the content side of things, Twitch have decided a personal touch works best when it comes to generating revenue. So, about nine months ago they took their US sales back in-house, and more recently they did the same in the UK.
Newton says that Twitch’s main focus is video advertising. “We can offer the same type of video experience across all platforms, whether you’re on your desktop, on a console, or on your mobile device, we have in-stream video opportunities. We think that this enables us to rival what traditional broadcasters are offering. Then alongside that we also offer display, page takeovers and rich media, but the real meat is certainly on the video side.”
The comparison with the broadcasters is interesting as the demographics align with the people traditional TV has been losing. “We target a young, male audience who are well known for being very tough to reach through other advertising methods, so we like our audience and engagement story” says Newton.
And the engagement story is an incredible one. The average Twitch user is on the site or the apps for an average of 106 minutes per day. The secret, say Twitch, is that the users aren’t just watching, but are interacting with the other viewers and the person who’s streaming, so it’s very much a shared social experience.
UGC or Premium?
I ask Newton if Twitch’s sales teams find themselves being challenged by buyers who might have concerns about the fact that much of the content is user-generated, even though the games themselves – which have often had hundreds of millions of them invested in them – form part of the visual experience.
“We certainly do come up against those kind of questions,” says Newton. “But the reality is that the majority of our content does come from professional or semi-professional broadcasters. We also have very strong policies when it comes to what people can and can’t do on the platform. One of our strengths is the ad experience we provide, which gives the broadcasters the chance to control when the ads are shown in the live stream. So it works a bit like a professional sports match, where the ads are shown at appropriate times during the breaks or at half-time. The broadcaster simply presses a button at the appropriate time.”
Towards the end of our call I confess to Scott and Chase that – even as someone who has played games for almost 30 years – that I still don’t really get the whole watching computer games thing. Why not play the games yourself and talk to people as you play? Is it the age barrier or some sort of cultural phenomenon that my generation missed out on? Chase asks if I’ve spent time on Twitch and I confess that I haven’t, but have watched similar videos on YouTube. Chase says I should give it a try and I agree I’ll give it a whirl.
Old Man, New Tricks
I tune into theREALhandi‘s channel, who’s a 24 year-old guy called Mike Olson. Mike was born without outer limbs or extremities (that’s hands and feet to you and me) and he’s chatting to someone about how he’d like a car so he can go to university. A viewer is asking him how he brushes his hair (he generally doesn’t bother), but for the most part the conversation is just friendly banter and relates to whatever’s happening in the game, which is Counterstrike, a classic first-person shooter.
Two things surprise me immediately. Firstly, when you’re watching someone play a game live, you get a very similar sense of anticipation that you get when playing a game yourself, so you want to see what’s around the corner and what happens next. Secondly, the chat functionality and audience interaction really does feel generate a warm atmosphere of guys (it is mainly guys) just hanging out. Watching other people play games is a strangely relaxing experience and I’m surprised to find myself feeling a tinge of regret as I close my browser window. While I’d struggle to hit the 106 minutes a day average even if I wanted to, I suspect I’ll be back.
*Here’s a breakdown of the types of broadcasters you’ll find on Twitch: games publishers, who will publish games for developers, who make the games, although many also develop games themselves e.g. Activision, Electronic Arts; developers e.g. Bioware, Epic Games; editorial sites Gamespot, IGN; e-sports, which is competitive gaming on games like League of Legends, Call of Duty etc.; gaming events (E3, Comic-Con); and then there’s user-generated content.