[raz32dust]

I don't get it. From an outside perspective, it feels like they must be raking in the cash - they take a large cut from subscribers and the number of ads is crazy. Viewership growth seems good [1]. The product seems solid and well-built. The demand is clearly there. Serving live video is obviously expensive, but curious if that is really the biggest component (other than personnel). Would be cool if some industry insider could shed some light on what's wrong with this business.

[1] https://backlinko.com/twitch-users

[bitmasher9]

1. I think the infrastructure costs is probably more than you think. It’s probably the single biggest line item. They have to encode every video stream to multiple formats, and then deliver it globally.

2. The core product is pretty mature.

3. Elon raised the bar for how large of a staff cut you can make.

4. Most of their revenue is split with content creators.

5. They lost their CEO about a year ago. New guy has to make his mark.

[covercash]

Twitch just announced a partnership with Nvidia at CES to allow streamers to encode multiple versions of their stream on their own PC and push them to Twitch. Previously, only partner/affiliate streams had transcoded streams at various levels of quality. That might cut back on the amount of transcoding Twitch has to do server side…

They also said they’ll be supporting AV1 and NVENC codecs soon which can help reduce bandwidth costs. They currently only support h264.

[VirusNewbie]

>3. Elon raised the bar for how large of a staff cut you can make.

Did he? Their revenue is way down, and they've had a lot of downtime. Unlike Netflix, they make most of their money on ads, not subscriptions, so more downtime is more money lost.

They're also on a huge hiring spree right now. Go look at how many roles they're hiring for. I don't think they'd be hiring that much if everything was fine and dandy.

[stefan_]

The infrastructure is bought from Amazon, who in turn own them. Makes you wonder if it’s actually unprofitable, on the whole.

[runevault]

One note on line item 1: Only Partners and sometimes affiliates get transcoding. Everyone else is just whatever they stream at.

[itsTyrion]

> think the infrastructure costs is probably more than you think.

exactly. most people with good enough internet stream at 6 mbps CBR. A streamer with 1k viewers costs them several terabytes! egress for a quick 2 hour stream.

[londons_explore]

> Elon raised the bar for how large of a staff cut you can make.

Every member of staff fired now has a beef with the company, and being a social media company those staff will probably be big social media users with quite a lot of influence. Some may set up competitors or just badmouth you and your product.

Elon discovered this the hard way.

[asdfasdflkj211]

You answered your own question. Twitch is solid and well-built. It doesn't need an army of well-paid engineers to maintain it and isn't seeing a great ROI on new features. Some companies repurpose all, many or some engineers when the spreadsheet says to, others fire them wholesale.

[londons_explore]

Not many people realise this. Engineers build stuff. When your product is feature complete, you can get rid of most of them.

Big tech companies keeping tens of thousands of engineers on staff despite their core product not seeing substantial changes for years are just wasting money.

[verdverm]

I found it to be rather buggy personally, it constantly freezes and needs to be refreshed

[nine_zeros]

Sounds silly. Who's going to save the company during the inevitable outages?

[bradleyishungry]

They have more competition than ever with youtube streaming actually somewhat catching on and tiktok streams becoming more popular. It seems weird to cut so many engineers when it’s probably most important now to innovate. Its not even just R&D that’s important, either. Their product is worse in some aspects than their competitors and a lot of the reason why they’re still dominant in their space is just the community of users on the website.

[Brybry]

I think viewership peaked in 2021 and has been flat or down since then. [1][2][3]

I know some of my friends watch Twitch less because the ad policy became toxic.

[1] https://twitchtracker.com/statistics

[2] https://sullygnome.com/longtermstats

[3] https://streamscharts.com/overview#:~:text=Twitch%20growth%2...

[hsbauauvhabzb]

Basing ‘peak’ of a streaming service on a time when people were forced to be indoor seems like a bad metric. They (probably/hopefully) won’t see that rate of growth organically, but that doesn’t mean that it’s the peak.

[ProfessorLayton]

I personally switched to youtube* for the streams I watch, since twitch's ads can be really disruptive. Not to mention they used to be ad-free for prime members, while at the same time the ad rolls became longer and longer.

*I pay for youtube premium

[joegibbs]

What happened to the ad policy?

[apexalpha]

Most of their cost will be infrastructure. Encoding and serving multiple streams per channel to different devices with a low buffer must be expensive.

On the other hand: they host everything on AWS. Which Amazon owns. So while Twitch might make a loss the parent company might be perfectly happy making up the difference in AWS profits.

[insane_dreamer]

Did they have a hiring spree during the pandemic like all the other tech companies and now returning to the mean?

[coffeebeqn]

And record numbers of people looking for unhealthy para social content when stuck at home

[refulgentis]

It's happening at every tech company, over and over again, quietly and loudly.

Unfortunately tech is probably the ur-contrarian and ur-isolated field, and from the reactions I see to this, I worry there will never be a systemic response by employees.

[bjclark]

When twitch was acquired by Amazon the rumor was that they were the single biggest AWS customer and they were going to go out of business because they didn’t have the cash to pay the bills. It would have been bad for AWS and Amazon was investing in games. If you read between the lines that’s basically said in this article from that time. https://www.vox.com/2014/8/26/6067085/amazon-twitch-tv-video...

[firstSpeaker]

> single biggest AWS

I think that has always been Amazon.com since it runs on AWS.

[londons_explore]

> they take a large cut from subscribers

I'm surprised they don't have a 'choose your own revshare' setting, allowing the creator choose how much to pay twitch.

Obviously twitch will recommend more profitable creators, so you get a kind of 'race to the top', with creators offering twitch a larger and larger revshare, knowing that unless they do, their audience size will dwindle.

It also encourages creators to come in from other platforms - if you already have an audience and just want to extract money from them, then you don't need to be in twitches recommendations and can choose a low revshare to milk the subscribers.

[joebob42]

I think subscribers are sticky enough that this would pretty quickly drive revshare down.

Especially when I imagine a sizable portion of revenue comes from the very biggest streamers, who may not need discovery from twitch at all and would then default to the lowest value. Like, this model has sort of flipped setup from what I'd think you want; the more successful you are the lower twitches cut.

I suppose they could just make the minimum value 50% (iiuc this is the current value). But I'm still not sure how much it would help.

[nicce]

More profits. Simple as that.

[minimaxir]

Even in late-stage capitalism, you do a 5-10% staff cut at most to trim the fat so-to-speak.

A 35% cut indicates something with the business is fundamentally wrong.

EDIT: I apologize for the completely unintentional derail.

[glenngillen]

I’ve never been the target audience for this, so sharing anecdata with a sample size of 1 (well, 2 kids). But as I type this my kids are watching some streamer play minecraft on our TV. They’re watching it via YouTube though. I don’t know the last time they used Twitch, and I suspect the youngest doesn’t even know how to get there.

[summerlight]

I guess Twitch is probably not in an area of profitable business given the infrastructure cost of video streaming services, especially in that it cannot enjoy all the cost optimization like Netflix/YouTube due to its nature of live streaming.

[paxys]

It's just a brutal space to operate in. Even YouTube barely manages to break even.