Twitch’s biggest asset has always been its community. Since the live streaming platform started as Justin.TV in 2007 and through its purchase by Amazon for $1 billion in 2014, the site’s biggest appeal has been its network of creators and fans. “Bleeding purple” used to be a streamer motto and creators would pull in looks of awe when walking through conventions with partner-exclusive Twitch hoodies.
But that spark of energy that propelled Twitch to the top of the ladder isn’t as shiny as it once was. From mainstream platforms like YouTube to edge lord palaces like Kick, there’s now a wide variety of places creators can go to stream directly for their fans. Along with Twitch’s viewership, the user experience of the platform has also been on a downward tumble, with unskippable ads both in the beginning and throughout the stream.
That’s why I’m not surprised by this latest report from the Wall Street Journal, which claims that Twitch “remains unprofitable” to Amazon. And that engagement on the app is on the decline. According to documents seen by WSJ, Twitch earned “$667 million in ad revenue and $1.3 billion in commerce revenue” which is only about half of one percent of the e-commerce giant’s earnings. According to Twitch reporter Zach Bussey, Twitch’s revenue numbers seem to have “basically gone back to 2019-2020 earnings — despite twice the userbase.”
During the pandemic, when we were all stuck inside and watching “Fortnite” and “Among Us,” viewership on the platform was rapidly rising. Twitch was convinced that that upward trend would continue. But in the past year, Twitch has had two rounds of layoffs. 400 employees in March 2023 and over 500 in January 2024.
To that end, Twitch has never been a profitable website, with its server costs and payouts to streamers taking a chunk of what it earns from subscriptions and ad sales. Working as a division inside of Amazon, the company had failed to come up with a plan to make money or hire the necessary talent to make any vision a reality. The sad truth is that people dislike watching long ads when they are watching their favorite content. It’s why cable lost the war to streaming.
The only thing keeping Twitch afloat is Amazon’s desire to reach the younger demographic that uses the platform. A spokeswoman for Amazon told the WSJ that “it has always taken a long-term view of Twitch and noted its ability to attract harder-to-reach audiences.” But if that audience gets fed up and starts bleeding red instead of purple, then there’s little reason for them to keep this bloated corpse afloat.
