Twitch.tv, the Amazon-owned livestreaming video platform, is a major player in both the video game and online video industries. Twitch livestreams broadcast the gamer playing a video game, while fans livechat and engage with both the streamer and fellow followers in a chatroom setting. Professional Twitch streamers can make hundreds of thousands or even millions of dollars per year by sharing live videos on the platform.
How do Twitch streamers make money?
Twitch is known for its generous monetization options for creators. This opportunity for gamers to make money has fueled the popularity of the niche platform in spite of fierce competition from behemoths like YouTube Gaming and Facebook Gaming. Video game enthusiasts flock to Twitch to watch elite gamers play popular games, rewarding them by becoming a paid channel subscriber or sending “Bits,” Twitch’s virtual currency. Even beyond the Twitch platform, professional gamers have found ways to earn a living by tapping into their fervent fanbase.
A primary way that Twitch streamers can earn revenue is channel subscriptions. As Twitch explains, “subscriptions let your community support you on a consistent basis and get rewarded with exclusive perks for doing so.” Twitch splits the subscription revenue with streamers, meaning that streamers earn half of all subscription fees.
Twitch streamers can apply to become part of Twitch Partners, Twitch’s official designation of the most popular video game broadcasters. Becoming a Twitch Partner allows the streamer a range of exclusive features, many of which are specifically designed to help them monetize their channel. Twitch also has a program called Twitch Affiliates, which allows gamers with a more modest following to earn revenue through subscriptions and other means.
Viewers may choose from three sub-tiers for monthly subscriptions:
Subscription fees grant viewers additional perks, with each tier corresponding to better rewards. Special perks include the use of custom Cheermotes, a subscriber-only chatroom, and the ability to watch livestreams ad-free. Subscriptions auto-renew each month, providing a reliable recurring revenue stream for Twitch streamers.
Twitch users can purchase and gift subscriptions to other members. Amazon Prime members receive one free month of subscription, although it doesn’t auto-renew. Still, Prime subscribers get a foot in the door, leading to more potential paid subscribers down the line.
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Channel subscribers can support their favorite Twitch influencers by purchasing Twitch’s virtual currency known as “Bits.” Users can purchase Bits in the following denominations:
These Bits can be redeemed to “Cheer”—users simply type “cheer” in their chat box and enter the number of Bits they want to spend.
The Cheer is displayed in the chatroom as an animated gif, either a Bit gem or a “Cheermote,” Twitch’s version of emojis. Twitch Partners can create customized Cheermotes, which only their channel subscribers can use.
Streamers earn money each time their fans cheer them on—approximately $0.01 per Bit. Fans typically use their Cheers to celebrate particularly exciting moments during gameplay, like when a gamer beats a boss or completes an impressive feat within a video game.
Streamers can show appreciation for Cheers by posting a leaderboard on their profile page.
Twitch fans will give pure donations via Paypal, Patreon, or other creator donation platforms. Donations, colloquially referred to as “Tips,” will range anywhere between a few dollars to thousands of dollars. Streamers can display “Donate to PayPal” icons directly on their channel homepages. Donations can be especially lucrative because Twitch streamers will earn 100% of the donation, minus a transaction fee.
Several niche platforms have cropped up within the Twitch economy specifically to help streamers bring in donation funds, like Streamlabs and StreamElements. Some players use other payment platforms to solicit donations in cryptocurrency.
Some streamers set up “milestones” for donations, with specific goals attached to aspirational dollar amounts. These donation goals can be ordinary (e.g., paying rent, college tuition) or playful (e.g., cash for pizza, tattoos).
When a fan donates during a livestream, it’s broadcasted in the chatbox along with a message. Twitch streamers frequently read the message aloud and respond while they’re on-air to show gratitude for the donation.
Ad revenue is another monetization channel for popular Twitch streamers. Similar to YouTube video ads, both pre-roll and interstitial ads play whenever a viewer tunes in to a livestream or watches a prerecorded gaming stream or clip. Twitch’s ad revenue falls under a flat-rate CPM model.
Users who are Twitch Prime members or use ad-blockers will not see ads. In addition, channels will not display ads to users who pay for a subscription. Twitch recently announced that they will be phasing out ad-free viewing as a Twitch Prime perk, in an effort to support a crucial revenue stream for creators.
Twitch influencers frequently repost their livestream videos on other channels, including YouTube Gaming, Facebook Gaming, and other video platforms. Creators edit lengthy livestreams, linking gameplay highlights into compilation videos. In this way, streamers can generate additional ad revenue by reaching audiences who aren’t on Twitch.
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Twitch streamers frequently partner with brands, a niche of influencer marketing that’s gamer-specific. Streamers can work with brands as either a one-time campaign or an ongoing, long-term brand ambassadorship. Naturally, video game industry advertisers are the most common sponsors. As Twitch grows in popularity, non-gaming brands are increasingly partnering with Twitch creators for influencer marketing campaigns.
Common types of brand sponsorships:
Twitch creators and brands work together in a variety of ways:
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Professional video gaming is big business. eSports, which is short for electronic sports, is the colloquial name for the international competitive video gaming community. It’s estimated that total revenue for the eSports industry is currently over $906 million, and projected to be worth more than $1.5 billion by 2021.
eSports has evolved into its own subculture, as eSports leagues and corporate sponsorship of tournaments have grown in scope to be comparable to mainstream sports like soccer or tennis. A casual glance at ESPN’s eSports portal confirms that eSports is a worldwide phenomenon with its own superstars and rivalries, on both an individual and team level.
Twitch streamers can attract sponsorship deals as individual players or by joining a team that’s part of an eSports league. Player sponsorships can range from several thousand to hundreds of thousand dollars, depending on the size of the deal.
The biggest eSports teams operate as businesses, employing both professional gamers and management staff full-time. Gamers practice 8+ hours per day to train for tournaments. As far as income, up-and-coming gamers usually receive a baseline salary, sponsorship to play in tournaments, and expense reimbursements for travel and gaming gear. Exceptionally skilled gamers receive these same benefits, plus a more generous sign-up bonus and a higher salary.
Cash prizes for winning tournaments—which can be millions of dollars at elite competitions—are another source of income. The bounty is usually split amongst players and other staff. Owners of eSports leagues have the liberty to adjust their roster strategically; gamers operate as free agents, meaning they aren’t bound to a specific league outside of preset contracts.
Practically all Twitch creators bring in money through affiliate programs. An affiliate sale is broadly defined as an online transaction that was driven by a third party promoter. In the Twitch universe, a Twitch user clicks a banner ad on a streamer’s profile page, makes a purchase on a retailer’s site, then the streamer receives a fraction of the total revenue from that sale.
Twitch offers a catalog of Extensions which streamers can embed into their profile page. The most common types of affiliate integrations are:
Twitch allows streamers to customize their profile page and include both banners and text links to any site. Each creator has full design control over their profile page, which injects variety into the ads.
G FUEL Energy, the official energy drink of eSports, partners with many Twitch streamers who each put their own spin on the ad.
Streamers can design and sell customized merchandise through their channels. Popular types of merch include apparel (especially t-shirts and hoodies), hats, coffee mugs, stickers, and phone cases.
The rise of social media has spawned many companies that specialize in helping creators design and sell merch products to their fan communities. Design By Human, INTO THE AM, and Teespring are all popular on Twitch, streamlining the process of producing products. These platforms simplify each step, providing drag-and-drop design modules, manufacturing the product, and managing order fulfillment and checkout.
In addition, Twitch’s parent company launched the Merch by Amazon, which allows Twitch partners to sell their merchandise through Amazon. Merch by Amazon is invite-only and comes with the benefits of Amazon’s fulfillment, customer service, and Prime shipping.