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Amazon<\/a> is quietly sitting on a $46 billion product, Laura Martin, an analyst from Needham, wrote to investors Wednesday.\u00a0<\/p>\n It\u2019s not Prime Day; it\u2019s not the Ring; it\u2019s not even AWS, its tremendously profitable cloud computing division.\u00a0<\/p>\n Instead, investors should start paying attention to Amazon\u2019s live streaming platform, Twitch, which may be relatively unknown to older generations, but has become a live-streaming staple among Gen-Z and Gen-Alpha.\u00a0<\/p>\n Twitch is best known for video-game streaming and is \u201cthe largest streaming platform for video gamers, by far,\u201d Martin wrote. Yet the service has expanded far beyond the gaming world.\u00a0<\/p>\n Twitch, Martin noted, allows Amazon access to an advertising market the company wouldn\u2019t otherwise have. Nearly two-thirds of Twitch users are men, and nearly three-quarters of them are under 34, Martin wrote. For Amazon as a whole, only 45% of its customer base is under 34, and most of them are female.\u00a0<\/p>\n \u201cEndemic advertisers (ie., video games & accessories) that advertise on Twitch also buy ads on AMZN as well, and many of these advertisers would not be clients of AMZN without Twitch,\u201d she adds. \u201cSimilarly, brands can buy ads in Twitch to access hard-to-reach young men, most of whom do not watch traditional TV.\u201d<\/p>\n It\u2019s not just men, however. At any given moment, over 2.5 million people are watching someone stream on Twitch. The service boasted 35 million average daily users in 2022, and 1.3 trillion minutes watched on the platform that same year, according to its advertising page<\/a>.\u00a0<\/p>\n Those startling numbers don\u2019t just come from video games: Martin likens Twitch\u2019s market dominance to that of Google\u2019s YouTube.\u00a0<\/p>\n \u201cYouTube<\/a> has carved out the VOD (video on demand) space and Twitch has carved out the live-streaming space,\u201d Martin wrote.<\/p>\n Twitch has boosted the careers of ultra-popular Gen-Z comedians: most famously,\u00a0 22-year-old Kai Cenat (who has the most followers on the platform, at 12 million), gained popularity on Twitch for his 24-hour streams and pranks. Celebrities from Drake to IceSpice have sat down<\/a> on Twitch to joke with Cenat; once, Drake bet $121,000 on Cenat beating rapper 21Savage in a game of NBA 2K (Cenat lost, then broke his streaming set-up out of rage).\u00a0<\/p>\n The platform has also become popular among young political commentators, such as Hasan Piker, better known as Hasanabi on Twitch, where he espouses left-wing political takes to his 2.1 million followers. On one pandemic evening in 2020, Piker streamed with Rep. Alexandria Ocasio-Cortez<\/a> (D-N.Y.) to play Gen-Z-favorite Among Us and nearly broke the platform as 400,000 viewers scrambled to watch. As Ocasio-Cortez played, she also chatted about health care policy and bantered with the constant stream of comments from viewers.\u00a0<\/p>\n \u201cI think the lack of predictability on a stream is what makes it compelling,\u201d Ocasio-Cortez, who still occasionally streams on Twitch, previously told<\/a> the Washington Post<\/em>. \u201cBeing able to be comfortable in the chaos of inviting so many people in the conversation \u2026 you need to be okay with that.\u201d\u00a0<\/p>\n Those who embrace the mayhem, and get popular off it, can reap sizable rewards: A data leak from 2021 suggests<\/a> that the platform\u2019s top creators make $8 to $9 million a year from the platform.\u00a0<\/p>\n Streamers get paid through a subscription model: viewers can subscribe to their favorite content creators for a minimum of $4.99 a month to gain access to perks like access to emotes \u2013 moving emojis \u2013 badges, and ad-free viewing.\u00a0 However, the platform has undergone controversy with creators over their payouts.<\/p>\n Some creators rebelled<\/a> against Twitch last year after it decreased the amount of subscription revenue it allotted to Partners (content creators who meet certain criteria<\/a>). The current split is 50\/50, a significant decrease from the original 70\/30 split that allowed creators to build livelihoods and businesses on the platform.\u00a0<\/p>\n Twitch later announced the Partner Plus Program<\/a>, restoring the 70\/30 split for only the first $100,000 earned by top-tier creators, a group that includes just the 1,066 most popular creators<\/a> on Twitch\u2019s 14 million-person platform.<\/p>\n Some creators still complained about the limited number of people eligible for the new Partner Plus program and the various terms and conditions. \u201cThis is so unobtainable right now based off individual and reoccurring subs\u2026this doesn\u2019t help the streamers at all,\u201d Twitch partner PaladinAmber<\/a> said in response to the new program.<\/p>\n Since then, Twitch CEO Dan Clancy has been working overtime to restore relations with creators. In January, Clancy announced a new system: anyone with more than 100 paid subscribers would now receive 60% of the money fans pledge.\u00a0<\/p>\n \u201cTwitch has made some good moves to help creators make money, but it\u2019s still tough to make a living just from streaming alone,\u201d Jerome Aceti, a Minecraft Twitch streamer, told Fortune. <\/em>\u201cA lot of us have to rely on ads, product promotions, and other ways to bring in income.\u201d\u00a0<\/p>\n Aceti has only recently expanded to Twitch from Youtube, where many of his 5.41 million followers know and love him as JeromeASF.<\/p>\n \u201cTwitch is about being in the moment and engaging with viewers live,\u201d Aceti said. \u201cIt used to feel more like a small, tight-knit community, but now it\u2019s this huge platform with all kinds of content and different ways to engage your fans.\u201d\u00a0<\/p>\n Despite its popularity, the platform has struggled with profitability<\/a>, laying off 35% of its staff in January to help pay the prohibitive costs associated with supporting 1.8 billion hours of live video content monthly.\u00a0<\/p>\n Amazon first acquired Twitch in 2014 for about $970 million, when Twitch had a revenue of about $72 million, Martin wrote. In 2023, the website generated approximately $3 billion in revenue, according to Martin. She upgraded Amazon\u2019s<\/a> price target to $210 from $205 while maintaining a Buy rating on the stock. Martin\u2019s new price target is \u201cbased on the upside we calculate from Twitch.\u201d<\/p>\n<\/div>\n\nGaming and beyond<\/strong><\/h2>\n
Creator revenue\u00a0<\/strong><\/h2>\n
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