Starting To Livestream? This Data From Gaming Can Guide Your Strategy

This article is more than 2 years old.

Gaming is almost always ahead of its time in terms of business model and technology relative to the rest of the media industry.  And in the platform-dominated world, the gaming industry could be a very valuable prognosticator for the rest of the industry.  With Facebook, Twitter, and Google expected to pull in 44% of all display advertising revenue in 2016, and media companies fighting the growing consumer boycott of display ads with popups that annoy the audience still loyal to them, the industry is desperate to find revenue models that make sense.  Chris Dixon, a partner at Andreessen Horrowitz, wrote an excellent post a few months ago explaining different lessons media companies can learn from gaming.  Additionally, Frederic Filloux, editor of the Monday Note, added valuable insights into the monetization models of the most popular games.  Reading these and recent news about M&A, media companies can look on with envy as game publishers rake in billions of dollars based on these new revenue models.  

Meanwhile, individuals and smaller operations starting to livestream can learn a lot from the successes of the most popular gaming channels on Twitch, owned by Amazon, and YouTube.  These were the first live stream entrepreneurs, and they are about to be joined by a lot more in traditional media channels as Facebook, Snapchat, Twitter, and every other platform pushes for more live video on the site.  Mark Zuckerberg has even stated that “video is a mega trend, almost as big as mobile.”  His company is backing that up with more than 50 million dollars to encourage media companies and celebrities to live stream on the platform.  Live streamers on Twitch and YouTube are making millions of dollars on audiences that reach millions of people.  The live stream gaming industry is several years old at this point, and data from the leading platform,, offers valuable lessons to entrepreneurs looking to build their own brands on the big social platforms.

It Takes Three Years To Build A Following

This analysis is based on a snapshot of 4,213 concurrent streams on Twitch on June 14, 2016 across 11 popular games.  From these streams, data was gathered that can explain what it takes to build one of the larger and more profitable channels on Twitch.  For each game, the outlier channels (“Outliers”) were considered any channel that had a total follower count greater than two standard deviations from the mean number of followers for each channel broadcasting that game.  It’s important to note that many channels stream several games, but since this data is a snapshot in time, each channel was analyzed as if it were always broadcasting the game it was at the time of the scrape.

As expected, the Outliers demonstrate that it takes several years to build a substantial following.  Over 75% of the Outlier channels were created during or before 2013.  On the other hand, the channels that fell in the lower 95th percentile of total followers were predominantly created in 2014 or later.  This may indicate that people who don’t generate a significant following stop broadcasting, which is almost certainly true, but it’s also certainly true that Outliers took years to build their audiences.  Although a live streamer may have a Chewbacca Mom moment, it’s much more likely that building an audience will take years before reaping significant rewards.

Followers Lead To Compounding Returns On Views

As a Twitch streamer grows an audience, there’s corresponding compounding growth on the number of views streamer’s channel receives.  The total follower and viewer counts had to be normalized on the log scale because there was an exponential growth curve on both the follower and viewer numbers.  Interestingly, a 10% increase in followers correlates with almost exactly the same 10% growth in total views.  The faster a channel adds followers, the faster it grows its views on Twitch.  This is likely due to platform-specific algorithms, which surface the most popular channels at the top, but those same choices will almost certainly happen on any other platform as well.

You Need A Big Audience To Make Lots Of Money

Twitch, like other platforms, offers its best channels significant benefits financially to attract top talent and keep them interested in the platform.  Of course, it’s a highly competitive program, but it’s very clear that having a lot of followers is required.  The median partner on Twitch at the time of the snapshot had 24,700 followers; whereas, the corresponding median for non-partner channels was only 59 followers.  These partners receive better terms on the revenue share, advertising revenue shares, and other perks.  Most channels make their money on subscription revenue or donations.  These subscriptions are typically $4.99.  If you assume a click-thru rate of 0.10% and the average follower generates about 118 views/impressions on the channel, a channel with 24,700 followers could be making $14,500 per month (with zero churn, which is very unlikely).

Twitch Channels Are Finding Other Ways To Make Money

In addition to advertising, subscriptions, donations, and eCommerce, Twitch streamers are turning to alternative income streams as well.  One potential revenue source examined was the growing industry of eSports coaching.  Surprisingly, almost 5% of the people streaming on June 14th were offering coaching or training via their Twitch channel.  Although there’s no way to tell how much money these channels were making from coaching, the channels mentioning the coaching terms listed at the bottom of the post were not significantly different from the channels not offering those services.  Streamers with big or small audiences are trying to capitalize on coaching and ancillary services to build a business around their followings.

Live streamers and other individuals who are trying to build businesses in the changing media landscape can learn a lot from the gaming industry where live streaming began in 2011.  The entrepreneurs who have succeeded there have been at this for more than 3 years, their viewers are growing exponentially as their followers grow, it takes a significantly large audience to make a substantial income, and they’re finding alternative income streams to advertising, eCommerce, and subscriptions, like coaching.  Following these strategies can be a guide for entrepreneurs in the media industry as video content is prioritized over the next few years.

I write about the businesses at the intersection of media and technology. Currently, I'm the CEO and Co-founder of I was the Director of Product Strategy at N...