Twitch is a platform that allows people to broadcast their gaming sessions to the public. As the chart below shows, this industry has blown up over the past five years, culminating in 355 billion minutes viewed in total in 2017.
If that sounds like a lot, that’s because it is. In fact, it’s equivalent to over 45 minutes for every human being on Earth.
Clearly, not everyone is watching, which means that the people who are watching are tuning in for up to hundreds of hours, possibly even more, per year.
It’s even more than the amount of people watching major cable networks. Just this past January, Twitch blew by CNN and MSNBC with 962,000 viewers at once.
At one point, over 300,000 people were even watching the same channel, that of a popular “League of Legends” player.
But let’s get to the financial side of the streaming service.
Gaming Video Content Market
In 2017, the gaming video content market was worth an estimated $3.2 billion. Twitch had a commanding 54% market share, bringing in $1.7 billion.
But how does it make money? One way is obvious: ad revenue. But that only accounts for about 20% of its overall sales.
Twitch’s primary source of revenue is through subscriptions and donations, which comprised 51% of its 2017 revenue. The way this works is that viewers can subscribe to Twitch partners, which are the most popular gamers on the network, and Twitch gets a cut of that monthly payment.
Twitch is still relatively unknown to the mainstream, at least for now. But the fact it’s attracting more viewers than major news channels that are watched everywhere suggests that it won’t be for much longer.
Unfortunately, you can’t buy stock in Twitch directly. But the next best thing is to buy shares of Amazon.com Inc. (Nasdaq: AMZN), which bought the streaming company back in 2015.
Internal Analyst, Banyan Hill Publishing