Former Twitch employee explains why sub revenue split won\u2019t change Twitch streamers are demanding a higher revenue split from channel subscriptions, but a former Twitch\/Amazon employee has explained why this split would only hurt the platform. Currently, Twitch offers streamers a 50\/50 split in revenue when it comes to channel subscriptions. When viewers pay $5 to subscribe to their favorite streamer, roughly $2.50 goes into the streamer\u2019s pocket. In November 2021, streamer Dezirablegamer took to Twitter to demand a higher revenue split, calling the current 50% model\u201dcrazy\u201d. Shortly after, the poll to \u201cChange revenue split between streamers and lower payout minimums\u201d became the most supported idea on UserVoice. While it sounds easy for the Amazon-owned company to pay streamers more, a former Twitch employee has provided a look at the economics that stop this from happening. Why Twitch can\u2019t pay streamers more Here are the real economics of the #SubSplit market no one wants to talk about: (or maybe they don’t understand) 1. Big streamers are a loss leader, every time someone who averages 5k (probably lower) goes live, Twitch loses money. Their paid subs will never be enough.\u2014 Sam Chen\u2077 (@djfluffkins) January 7, 2022 Sam Chen, a former employee for Twitch\/Amazon, has stepped up to the plate to discuss the \u201creal economics no one wants to talk about.\u201d In an attempt to clarify Twitch\u2019s sub split, Chen explained why the platform can\u2019t pay streamers more per sub. Chen made his case in three points capped off with a short FAQ. His first point is that big streamers (xQc, Shroud, Nickmercs) are a \u201closs leader\u201d for the platform. Anyone who averages roughly 5k viewers or more will cause Twitch to lose money anytime they go live. That\u2019s because it costs Twitch money to host streamers and provide a platform that supports 1080p broadcasts. The number of people watching large creators costs Twitch more than it can earn from that streamer\u2019s subs. The ad revenue also does not cover the cost of that streamer. 2. Mid tier streamers make up for this loss (mid level in this case is prob between 100-500, who knows with pandemic numbers). You\u2019re a size where your subs \u201clikely\u201d outnumber your viewers by a large margin. Twitch cannot be profitable without maximizing revenue from this group. \u2014 Sam Chen (@djfluffkins) January 7, 2022 Chen\u2019s second point is that mid-tier streamers (100-500 avg. concurrent viewers) make up for that loss. He stated that these streamers\u2019 sub counts likely outnumber their viewers by a large margin. \u201cTwitch cannot be profitable without maximizing revenue from this group\u201d \u2013 Sam Chen 3. Smaller streamers probably make back what they cost Twitch, maybe Twitch makes money from the ad side. Bonus: See why Twitch wants bigger streamers to run more ads without a better share of ad money? So they can POSSIBLY get them to pay their share. \u2014 Sam Chen (@djfluffkins) January 7, 2022 Lastly, Sam Chen claimed that smaller streamers might make back what they cost Twitch to host. Ad revenue also helps Twitch make up what they spend to host smaller streamers. Chen also stated that Twitch wants larger streamers to run more ads so the platform can afford to pay sub revenue. Why do streamers cost Twitch money? Chen further noted why streamers cost Twitch money to host. Prime subs aren\u2019t free. When a viewer uses a Prime Sub, they are making Twitch give streamers money from their own pocket. As well, it costs the platform money to provide its viewers with video. It also costs more when a streamer can output better quality video. Chen states that Twitch doesn\u2019t offer 4k not because it isn\u2019t capable, but because it would cost much more to provide that service. How can Twitch pay streamers more? In order for Twitch to pay streamers more and still be profitable, Chen suggested they adopt progressive taxation of larger streamers. Mid-sized streamers may be able to reap the benefits, but larger streamers would earn less revenue per sub. However, there is a way to better support streamers on the viewer\u2019s end. Bits are a much more efficient way of donating to a streamer. Instead of a 50% cut, Twitch takes less than 30% of the money viewers spend on bits. For instance, if you buy 100 bits, you pay $1.40. Twitch only takes $0.40 of that transaction. And as the number of bits a viewer purchases increases, the lower percentage Twitch takes from that transaction. If you purchase 10,000 bits for $126, Twitch only takes $26 or roughly 20% of the revenue. Why can\u2019t Twitch replicate other platforms\u2019 payouts? \u201cBut Sam, how do FB and YT do it?\u201d They\u2019re not of size. Before I started at Twitch, I always thought Mixer had such an advantage with their latency. Then I realized that their latency was because they didn\u2019t have the viewership Twitch did. Wait till they get bigger, it\u2019ll be bad. \u2014 Sam Chen (@djfluffkins) January 7, 2022 The #SubSplit discussion has heated up recently because of YouTube and Facebook\u2019s increase in revenue split (70\/30). However, Chen also explained why Twitch can\u2019t replicate these splits. Facebook and YouTube\u2019s streaming categories aren\u2019t comparable to something like Twitch. There are a lot more people streaming on Twitch at any given time than any other platform. YouTube also has a larger number of revenue sources, whereas Twitch is dependent on ad revenue and subs. So, while it sounds like Twitch is a greedy unfair company, they may not actually be able to afford a larger sub revenue split.<\/p>\n","protected":false},"excerpt":{"rendered":"
Former Twitch employee explains why sub revenue split won\u2019t change Twitch streamers are demanding a higher revenue split from channel subscriptions, but a former Twitch\/Amazon employee has explained why this split would only hurt the platform. Currently, Twitch offers streamers a 50\/50 split in revenue when it comes to channel subscriptions. When viewers pay $5 […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-48825","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/dejan.au\/index.php\/wp-json\/wp\/v2\/posts\/48825","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dejan.au\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dejan.au\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dejan.au\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dejan.au\/index.php\/wp-json\/wp\/v2\/comments?post=48825"}],"version-history":[{"count":0,"href":"https:\/\/dejan.au\/index.php\/wp-json\/wp\/v2\/posts\/48825\/revisions"}],"wp:attachment":[{"href":"https:\/\/dejan.au\/index.php\/wp-json\/wp\/v2\/media?parent=48825"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dejan.au\/index.php\/wp-json\/wp\/v2\/categories?post=48825"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dejan.au\/index.php\/wp-json\/wp\/v2\/tags?post=48825"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}