How Twitch Can Compete with Broadcast TV

By Nicholas L. Johnson

Twitch’s acquisition is just the beginning of live streaming as a platform

Amazon made a big splash this week with its $970 million acquisition of Twitch, snatching the live streaming platform from the clutches of would-be acquirer Google.

Twitch, which grew out of the live streaming website Justin.tv, focuses on video games, but its reach goes far beyond the niche audience you would expect.

When Twitch streamed the World Championships of the popular game League of Legends, it reached 8.5 million concurrent viewers. For comparison, that’s more viewers than watched any game from the 2014 Stanley Cup Finals and significantly more than the 1.2 million people who tune into ESPN during prime time, on average.

While the immensely popular League of Legend’s annual event may have been an outlier, on an average night, Twitch reaches 540,000 prime-time viewers, more than AMC, MTV or TNT. And in the US, Twitch generates more streaming traffic than HBO Go.

So far Twitch has succeeded by benefiting from amateur, user-generated content. This model has worked well, helping the streaming platform take over the video-game market (which, by the way is a $60 billion industry, larger than the music industry or Hollywood), but after the acquisition by Amazon, its ambitions will go much further.

As the platform continues to grow, it will need to pursue more high-quality broadcasts if it wants to compete for the attention of a mainstream audience and, most importantly, advertisers. Think of how YouTube incorporated professionally made music videos from major artists into its stream of amateur content.

Even within the video-game industry, Twitch has competition in the premium content arena, most notably from Major League Gaming (MLG), which specializes in the kind of multimillion dollar, big-budget broadcasts you’re used to seeing on ESPN.

In order to reach its potential and cement its status as the go-to place for esports streaming, Twitch will likely need to undergo a YouTube-like transition toward more premium content.

Making the transition from amateur to the pros

According to a report from Reuters, Twitch is preparing to do just that, as the company recently announced that its building a studio in San Francisco to host videogame broadcasts.

“We want to test ways to help our everyday streamer produce more and more premium content,” Twitch COO Kevin Lin said. However, he also said that Twitch won’t be using the studio to make its own content, so the future lies in finding ways to improve its user-generated content.

Luckily, the seeds of another way forward can be found in a new feature Twitch release a few weeks ago. Called “Host Mode,” this feature allows one streamer to embed, or “host,” the stream of another user on their own page. The host channel keeps users engaged when its stream is offline, and the hosted channel has the potential to gain new viewers.

This feature adds a great curation element to Twitch, and increases the social connectivity between users, as Twitch’s senior product engineer said in a recent press release. But the feature is still fairly limited: a streamer can’t talk directly to his viewers while hosting, and he can only host a few channels every 30 minutes.

While these limitations make sense in the context of the hosting feature, they limit its potential for enabling another behavior: true broadcasting.

Broadcasting live content is the Achilles heel of traditional cable providers

If you’ve watched any of the broadcasts from major esports competitions like MLG, you’ll remember that the event usually has a couple of commentators that discuss the action as it happens. Just like with traditional sports broadcasts, this helps keep the audience engaged and makes it easier for new viewers (or “noobs,” in the language of esports) to follow the action.

That’s where Twitch’s Host Mode comes in. Going forward, we see this this feature being evolved into a “Broadcast Mode” that would allows users to commentate on the action that’s happening on other streams.

Take a team match of the popular online game Counterstrike. At professional Counterstrike events, the commentators have the ability to move between the screens of all the players, so that viewers can always be at the heart of the action. For someone streaming on their own on Twitch, you’re usually limited to just one screen, and there’s no guarantee that you’re going to see the most interesting parts of any match.

A Broadcast Mode could change that, allowing the broadcaster to switch between the streams of several players who are streaming concurrently, keeping the audience where the action is while also helping them understand what’s going on.

While there are undoubtedly many ways paths to success for Twitch (I’m sure Jeff Bezos has plenty of ideas), a Broadcast Mode would not only facilitate the creation of more accessible and higher-quality content, but it also would create and entire new category of producers for Twitch.

This combination could help drive Twitch toward the kind of popularity that will allow it to compete with YouTube and broadcast TV for eyeballs and ad dollars.

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Filed under: Platform Innovation | Topics: Curation, Maker Platform, platform innovation, Platform Startup Advisory, platforms, Twitch