by - Twitch’s announcement in September that it would reduce its revenue share for creators sparked a backlash.
- At TwitchCon, top executives tried to smooth over the tension, saying most creators weren’t upset.
- However, top streamers at the event continued to air their complaints about the news.
Twitch is facing fierce discord within its community after announcing that it is essentially reducing the revenue share earned by top streamers and pocketing the savings.
Conversations with top Twitch executives and creators over the weekend at the annual TwitchCon event paint a divided picture of how users are receiving the news — and how the company is handling the controversy.
In late September, Twitch said it was ditching the standard 70/30 revenue split voted on by the community and instead imposed a 50/50 revenue split. Premium streamers who had deals with the platform were able to keep their 70% cut on the first $100,000 they make. The share then drops to 50%, which will likely be the standard when their contracts are up for renewal. The announcement sparked widespread disdain and frustration on social media.
Two Twitch executives told Insider at TwitchCon that their conversations with creators were less intense than recent ones online reaction drove up.
“Most of them aren’t terribly concerned about stream share,” said Doug Scott, Twitch’s Chief Customer Officer.
Executives also tried to allay concerns, saying Twitch will reinvest its extra revenue back into the platform, which will allow it to build new features that may help creators make more money in the long run.
“What we do is help you earn more every year as a result of the investments we make in the product, including new features like Hype Train, Ad Incentive Program, etc., which effectively results in your earnings as a streamer step up,” said Mike Minton, Twitch’s chief monetization officer.
Minton said that top-performing creators increased their annual salaries by an average of 27% year-over-year, based on data his team crunched to average creator salary increases over the past five years.
But high-ranking creators and former employees at TwitchCon were hesitant to accept that logic. They didn’t see the change in revenue share as a sign that the platform will thrive — instead, they’re upset and hopeful that the company can find capital elsewhere to grow its business, rather than reaching into the pockets of streamers.
Nick Kolcheff, better known as Faze Clan member and popular streamer Nickmercs, told Insider that this fee change could give Twitch competitors a boost.
“In the long run, it’s not going to be a good idea to keep going backwards in terms of how much creators make,” he said. “I think as much as YouTube and Facebook [are around] it’s back live.”
Twitch executives say creators will adjust to the payment changes
However, Scott said creators are more concerned about issues such as online safety and promoting their channels than changes in fees.
“There is, yes, stress and there is a lot of noise [revenue share] right now,” Scott said. “But when you talk to creators, they actually have a much broader set of concerns than spin share. They want to talk about a lot of different things in the service … Most of them aren’t particularly concerned about rev share.”
He and Minton said Twitch plans to use some of the additional revenue it generates to address these issues by investing in discovery and marketing tools for creators, as well as improving community guidelines.
“We can’t, unfortunately, present all the details of where all the costs go — workers, technicians, video or otherwise,” Minton said. “But the reality is that when we start doing that, supporting the service and having something that is viable, sustainable long-term is what’s behind the decision to make it clear that the typical revenue share for our subscription product is 50/ 50. It’s really that long-term viability and sustainability for the business.”
Minton said Twitch is “expensive” to run, and the company can’t raise those funds elsewhere because creator revenue from ads and giveaways make up the bulk of Twitch’s revenue.
The two executives said a creator’s overall profit rate approaches 65 percent if they optimize their Amazon Prime subscriptions. Twitch’s partnership with Amazon Prime incentivizes community users to subscribe to creator channels with their Prime account. Creators can earn more through these subscriptions.
“You take the streamer’s share of traffic and add the Prime earnings,” Minton said. “It’s not an easy concept to understand, but overall, we’re essentially paying a 65% turnover share if you include Prime.”
But streamers and former Twitch employees say the changes are troubling and could spell the platform’s demise
In a plenary meeting the day after the changes were announced, there was a barrage of questions inside the company about the new revenue split, according to two people with knowledge of the meeting.
Some of the top-voting employee questions included whether the move would drive away creators and viewers, a source said, as well as what silver linings could be reaped from low morale.
A former Twitch executive, who spoke to Insider on condition of anonymity to protect business relationships, said the revenue share cuts likely wouldn’t have a significant impact on the company’s cash flow.
“It’s so expensive to do high-quality live streaming,” the source said. “Changing stream share allocation will only take one small step in their journey to boost profitability. Twitch needs to consider other solutions.”
Kolcheff told Insider that he thinks Twitch needs to either run more ads to increase revenue or be more creative about ad placement. Many Twitch users don’t like ads in live streams, which can cause viewers to miss important moments. He pointed to YouTube and Facebook as examples of how Twitch could grow its advertising business without loading ads during live videos.
“All these companies that make any kind of content, they make money from advertising, it’s all advertising,” Kolchev said. “In order for Twitch to sustain itself, grow and get better… you need to show more ads.”
Kolshev, who will be directly affected by the changes to revenue sharing, said he is extremely concerned and disappointed by Twitch’s decision to pull revenue from creators like himself.
“At the end of the month for me when I look at it, it’s a big deal,” he said of his monthly income. “[Twitch is] it’s going in the wrong direction.”
Another prominent streamer, Ali Hassan, who is known on Twitch as SypherPK, told Insider that the platform will have to find other, more innovative ways to boost its top line. “Taking from creators,” as he put it, is a bad look and demoralizes the creator community.
“If the goal is to generate more revenue, the first place they should look is not the creator or the creator share,” Hassan said. “I feel it’s better to take a more creative approach: Bring new features that can bring profit to the company as a whole.”
