The Rise of Twitch: Television for the Internet Generation

In previous articles, I’ve stated that cable television is dying as a medium. It’s losing viewers at a historically unprecedented pace. That leads to the question of where those viewers are going. The answer may surprise you.

Rags to Riches

Merely five years ago, Justin.tv decided that enough interest existed in videogame broadcasting that they spun off their fledgling subsection into its own site. Justin.tv itself was only four years old at the time and had already altered formats once before when the titular Justin Kan chose to stop what he called “lifecasting.” Kan’s decision to live a (slightly) more private life led to a broader focus on content creation for Justin.tv. Through this pivot, the managers of the site stumbled onto a billion dollar premise. They named it Twitch.tv.

From the start, Twitch.tv offered diverse subject matter that quickly built a loyal following. As YouTube channel operators were discovering that Let’s Play content drives traffic, Twitch.tv expanded the concept one step further. Viewers could watch as the clips played out in real time. They had the ability to participate, offering suggestions for funny additions or guidance when a player struggled with a difficult game element. In other words, they enjoyed a profound new kind of interaction with games, one that almost doesn’t make sense.

Watching videogames rather than playing them sounds strange at first until you experience it. Then, you try it for yourself and quickly discover it’s oddly hypnotic. Someone else does all the hard work while you pay as much attention as you want at a given time. If that description sounds familiar, it should. That’s precisely how television has always hooked viewers. It’s a distraction that’s exactly as meaningful as the viewer desires. By utilizing a new iteration of a time-proven tactic, Twitch.tv is vampiring traffic away from cable television.

The owners of this new broadcasting format quickly recognized that they had a juggernaut on their hands. By July of 2011, Twitch.tv already claimed eight million viewers enjoying a billion minutes’ worth of programming. It was dazzling growth pattern that automatically included a revenue stream. Twitch.tv simply had to broadcast a commercial per hour to display 16.67 million advertisements. Even at a modest charge per commercial, it was a goldmine for the owners of Justin.tv, found money for their spin-off venture.

The growth phase for the channel continued unabated for years, and is still upwardly mobile. By September of 2012, they’d reached 20 million monthly viewers. For May of 2013, the number had increased again to 35 million monthly viewers.  It was a broadcasting channel that went from non-existence to the same number of watchers as The Big Bang Theory and NCIS combined in less than two years. That sort of stratospheric growth has happened maybe ten times in the history of the internet.

Why the Buy?

Financiers and venture capitalists quickly took note. A bidding war ensued for the company we now know as Twitch Interactive. For obvious reasons, Google expressed a strong interest in acquiring the oddest yet strongest competitor to the Let’s Play channels on their YouTube service. They faced an unexpected issue, though. Their lawyers and the federal government both noted that such an acquisition could violate antitrust laws. Once they passed on the opportunity, Amazon pounced, paying just under a billion dollars in cash and $1.1 billion in total for Twitch.tv.

For outsiders unfamiliar with the specifics of the channel, the entire situation seemed bizarre. People watching others play videogames was worth more than a billion dollars to Amazon? How did that make any sense? The answer comes down to traffic patterns and user demographics.

The ascendant growth of Twitch.tv caused no less than Forbes to describe the service as “The ESPN of Videogames.” In this article, they noted that the average Twitch viewer watched 100 minutes of programming each day. That’s the equivalent of two hour-long television dramas, presuming commercial skip. Business Insider expanded on that data, noting that a stunning 43 percent of all live-streaming video in 2014 came from Twitch.

The service is also the fourth largest bandwidth hog on the internet, surpassed by only Netflix, Google, and Apple. That means it beat Hulu, Valve and Amazon. Any one of those statements is amazing on its own. Valve is THE videogame content portal online, the place from which many Twitch users play the games they’re streaming. Despite this fact, it still doesn’t claim the overall bandwidth. Similarly, Hulu is one of the most powerful television broadcasters in the world, yet its traffic falls behind Twitch. As for Amazon, well, you understand why they’d have interest in buying Twitch. It’s a premiere example of If You Can’t Beat ‘Em, Join ‘Em.

Internet Is the New Television

Disney’s the one who should have made this move, though. Think about the situation from the perspective of someone within the broadcast industry like their corporation. Millennials are the largest living generation with 75.4 million people. Conventional broadcasters have predicated their entire television business model on the indoctrination process. Each parent teaches their child to watch television…except the under-25 crowd didn’t get the memo. People under the age of 18 display an even bigger disparity with their viewing habits. They just don’t care about the 20th century implementation of television.

The most important aspect of this burgeoning viewer base is what they represent. They’re the future of media consumption, and 100 million of them now watch Twitch each month. So, that’s millennials plus 25 million people from other age groups all experiencing the same evolving media consumption behavior. These fans of the format understand that Twitch, while ostensibly a videogame site, is capable of anything. It has recently offered live broadcasts from the floor of the Republican National Convention, although more people were interested in watching someone catch rare specimens on Pokemon Go instead.

What’s amazing about Twitch is that it’s got a little bit of something for everyone. Do you like cooking programs? Classic tutorials from Julia Child and Jacques Pépin are readily available. Would you rather watch someone eat? Believe it or not, social eating is a real thing, and it’s quite popular on Twitch. Similarly, artists show the process of customizing their cosplay outfits, Etsy members reveal how they craft their goods, and musicians display their skills in order to build an organic fan-base. In a way, Twitch is the live broadcasting equivalent of Wikipedia. It’s got a little bit of something for everyone, and it celebrates individuality in a historically unprecedented manner. That’s why kids and young adults embrace it so passionately.

The numbers reinforce this point. The overwhelming majority of Twitch viewers are 24 years or younger, which makes them the generation raised on the internet. Second screen behavior is second nature to them, and that’s why they’re not as attached to 20th century broadcasting methods. Instead, they accept and embrace emerging technologies. The very people who no longer watch television are the same ones loading Twitch on their smart devices and laptops each night.

That’s a glaring problem for broadcast television programmers. It’s a viewing audience they haven’t managed to indoctrinate into watching their shows. That’s especially problematic for someone like Disney. One of the explanations for the name change of ABC Family into Freeform was the channel’s programmers wanted to age their programming to match the viewer base. What happens when that group of potential customers stops watching television entirely? The ultimate ramification of this behavior is the death of modern television unless something is done. We’ll explore how these events are unfolding in part two of the discussion.

David Mumpower

David Mumpower

David Mumpower has covered media and television analytics for 15 years now. A self-described content omnivore, he owns literally thousands of movies and television shows on Amazon Video and Vudu. Email him at info@streamingobserver.com.
David Mumpower

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