Twitch & Google – Another crack.

PewDiePie follows Epic Games in undermining the supremacy of Twitch and Google.

• The first credible challenge to the dominance of Twitch and YouTube has arisen as YouTube’s biggest creator (PewDiePie) who has 93.5m subscribers has announced that he will exclusively live stream on an almost unknown platform called DLive (see here).
• DLive is run by a tiny Cupertino based start-up called Lino Network that has 30 employees and has raised around $20m to date largely from Chinese backers.
• 37% of DLive.tv’s traffic comes from Turkey where it ranks No. 323 according to Alexa (see here) giving it a global rank of 12,743 (effectively unknown).
• Although this is an obvious hit for YouTube as live streaming is part of its activity, it is far more serious for Twitch which is all about live streams and games in particular.
• The issue is the revenue split and while many live streaming platforms take as much as 50% of the revenue generated for the creator, DLive claims to take zero.
• Instead, 90% of the revenue generated is paid to the creator and 10% of the revenue is put into a pot and shared out among the viewers.
• In the absence of advertising, the revenue generation is going to be from donations and one-time gifts that give the user the right to ask a question or at least have the question or comment brought to the attention of the creator.
• How DLive makes money is unclear, but if it starts to get traction, this will cause problems for Twitch’s business model in particular.
• The risk is that PewDiePie’s following migrates with him to DLive creating big incentives for other creators to adopt the platform.
• Many creators are fairly fed up with YouTube in particular due to the arbitrary nature of its algorithms but lack scale in followers to make it on their own without YouTube or Twitch.
• It is important to note that PewDiePie is not leaving YouTube but is migrating only the live streaming part of his content from YouTube and Twitch to DLive.
• This is only a small part of overall video content consumption today, but it creates a potential chink in the armour that could lead to a much more competitive environment going forward.
• Everything depends on how much traction is generated and I think that there is a very good chance that DLive fails to generate real traction even with PewDiePie as its front runner.
• I suspect that this will lead to PewDiePie sticking with DLive for a few months and then returning to Twitch and YouTube where he will make more money even after they have taken their share.
• While I don’t think DLive is going to be the one to break the live stream duopoly, this move will embolden content creators leading to a credible challenge sooner or later.
• This is bad news for Google and particularly for Twitch which may end up having to aggressively cut its share of the revenue generated by creators.
• Fortunately, Twitch does not have to stand on its own two feet as it is owned by Amazon and the traffic that it generates is an important piece of Amazon’s consumer ecosystem strategy.
• Hence, I don’t think that Twitch is going anywhere as it can easily price match what anyone throws at it and still survive.
• The winners here are the creators who are likely to end up keeping more of the revenue they generate thanks to increasing competition.
• Twitch and YouTube are going nowhere but there is a possibility that their financial performance takes a meaningful hit.