Who Owns Twitch? - FourWeekMBA

In 2014, Twitch was bought by Amazon for $970 million. Therefore Twitch is part of Amazon, comprising other subsidiaries bought over the years, like Audible, Whole Foods, and Zappos (in total, Amazon has 12 subsidiaries). Therefore, as of 2022, Twitch is a multi-billion dollar company, making money primarily via advertising through its video streaming platform (creators use Twitch today across many other verticals).

Aspect	Description	Analysis	Examples
Products and Services	Twitch is primarily a live streaming platform for gamers and content creators. It allows users to broadcast and watch live streams of video games, creative content, and other forms of entertainment. It also offers features like chat, subscription options, and virtual currency (Bits) for tipping.	Twitch focuses on providing a platform for live content creators, particularly in the gaming and creative fields, with interactive features for engagement.	Live gaming streams, Creative streams, Twitch subscriptions, Twitch Bits for donations.
Revenue Streams	Twitch generates revenue through several channels, including advertising, subscriptions, virtual currency (Bits), and partnerships with content creators and game developers.	A diverse revenue model allows Twitch to monetize its platform while providing income opportunities for content creators.	Advertisements during streams, Twitch Prime subscriptions, revenue sharing with streamers.
Customer Segments	Twitch caters to a broad audience, including gamers, esports enthusiasts, creative artists, and viewers seeking live entertainment. It also offers a platform for content creators to reach their fan base.	A diverse user base and content offering attract a wide range of advertisers and sponsors, contributing to the platform’s success.	Gamers, esports fans, artists, musicians, and viewers of various interests.
Distribution Channels	Twitch primarily operates as an online platform, accessible through web browsers and dedicated apps for various devices (e.g., smartphones, gaming consoles).	Being an online platform allows Twitch to reach a global audience, with dedicated apps enhancing user convenience.	Twitch website, Twitch mobile app, Twitch on gaming consoles.
Key Partnerships	Twitch partners with game developers, esports organizations, and content creators to promote games and events. It also collaborates with advertisers and sponsors for marketing campaigns.	Partnerships with game developers help in game promotion, while content creators drive engagement and viewership. Advertiser collaborations generate revenue.	Partnership with Riot Games for League of Legends esports, collaborations with popular streamers.
Key Resources	Twitch’s key resources include its streaming infrastructure, user base, content creators, technology for live streaming, and the Twitch brand.	The infrastructure and technology behind live streaming are crucial for the platform’s functionality and success. A dedicated user base and content creators contribute to its value.	Streaming servers, Twitch user community, proprietary live streaming technology.
Cost Structure	Twitch incurs costs in maintaining streaming infrastructure, supporting content creators, marketing and advertising, employee salaries, and moderation to ensure a safe community environment.	Investment in infrastructure ensures a reliable streaming experience. Support for content creators and moderation are vital for platform integrity.	Data center maintenance, content creator partnerships, marketing campaigns.
Competitive Advantage	Twitch’s competitive advantage lies in its early mover status in the game streaming space, a dedicated user community, a strong brand, and features like chat interaction and Bits for user engagement.	Being one of the pioneers in game streaming has given Twitch a strong foothold. Interactive features enhance user engagement.	Twitch’s dominance in game streaming, TwitchCon events.
Value Proposition	Twitch offers a platform for content creators to showcase their skills, entertain, and interact with their audience in real-time. Viewers can engage with their favorite streamers and enjoy a sense of community.	Twitch’s value proposition centers on live and interactive entertainment, fostering a sense of community among viewers and content creators.	Watching live esports tournaments, engaging with streamers during broadcasts.

Table of Contents

Origin Story

How Twitch pivoted from Justin.tv, to become among the most successful streaming services, bought for a billion by Amazon.

Twitch is a North American live streaming service with a focus on esports broadcasting and video game streaming. Twitch was founded as a spin-off to Justin.tv. Founders Justin Kan and Emmett Shear noted that the gaming category on Justin.tv was the most-watched category on the site.

Three years after Twitch was founded, it was identified as the fourth-largest source of peak internet traffic in the United States. As a result, the parent company of Justin.tv was rebranded as Twitch Interactive and Justin.tv was shut down.

Twitch Interactive was then acquired by Amazon for $970 million, enabling the platform to become integrated with Amazon Prime.

Twitch continues to dominate the gaming and esports streaming market, boasting over a hundred million actively monthly users. The platform has since expanded to offer creative content, music broadcasts, and affiliate programs for streamers.

To understand Twitch’s origins, it is important to travel back to 2007 when founders Justin Kan and Emmett Shear launched the video broadcast service Justin.tv. The first broadcast showed Kan as he went about his daily life and in 2008, the platform was divided into several categories such as Music & Radio, News & Tech, Animals, Sports, and Entertainment.

Over the next four years, Justin.tv became popular thanks to hordes of users who illegally streamed sports matches and other copyrighted content. When the practice was eventually outlawed, it left Kan and Shear with business whose major drawcard had been surrendered almost overnight.

Pivot to gaming

Around 2011, the Justin.tv co-founders had a stagnant business with no real purpose.

However, the lawless nature of the platform and the freedom it afforded users had resulted in the formation of a passionate video game streaming niche.

The platform’s recent release as an app also resulted in an additional two million users.

But how to monetize the platform itself?

At the time, Kan disliked the niche because it required a lot of bandwidth and he didn’t understand why users would want to spend their time watching others play video games.

But irrespective of Kan’s grievances, traffic data suggested this was exactly what Justin.tv users were doing.

Emmett Shear, himself a gamer, noted that with some added features and embedded advertising, the niche had the potential to become profitable.

Twitch

The video game category from Justin.tv was then spun out to a new site called Twitch in June 2011.

Twitch was so popular three years later that the entire company became known as Twitch Interactive and the Justin.tv brand was formally retired soon after.

Amazon purchased Twitch in August 2014 for $970 million in cash.

Former Justin.tv COO Justin Lin also stressed that community input has been vital in the development of the new platform’s functionality and features. In essence, the development’s focus was on tools that could enable games to become professionals in their sport.

At the time, the deal was the largest in Amazon’s two-decade history and enabled it to benefit from the rapid growth in the gaming industry alongside Apple and Google.

The Evolution of Twitch

Origins and Spin-Off: Twitch was founded as a spin-off to Justin.tv, a video broadcast service, in response to the gaming category becoming the most-watched on the platform.
Growth and Rebranding: Within three years, Twitch became the fourth-largest source of peak internet traffic in the US, leading to the rebranding of the parent company as Twitch Interactive and the shutdown of Justin.tv.
Acquisition by Amazon: In 2014, Amazon acquired Twitch for $970 million, integrating the platform with Amazon Prime, making it a part of Amazon’s growing portfolio of subsidiaries.
Dominance in Streaming Market: Twitch has emerged as a dominant player in the gaming and esports streaming market, with over a hundred million monthly active users.
Diversification: Beyond gaming, Twitch expanded its content offerings to include creative content, music broadcasts, and affiliate programs for streamers.
Monetization and Pivot: Initially skeptical about video game streaming, the founders recognized the potential for profitability with added features and embedded advertising, leading to the spin-off of Twitch as a separate platform.
Amazon’s Strategic Move: Amazon’s acquisition of Twitch in 2014 marked the company’s entry into the gaming industry, positioning itself alongside other tech giants like Apple and Google to benefit from the rapid growth in gaming.
Community-Driven Development: Community input played a vital role in shaping Twitch’s functionality and features, focusing on tools to support gaming professionals and enhance the user experience.
Integration with Amazon Prime: As part of Amazon, Twitch became integrated with Amazon Prime, leveraging its existing user base to further expand its reach and impact in the streaming market.
Multi-Billion Dollar Company: As of 2022, Twitch has become a multi-billion dollar company, generating significant revenue primarily through advertising on its video streaming platform, which now caters to various content verticals beyond gaming.

Twitch’s Evolution Highlights:

Origins: Twitch originated as a spin-off from Justin.tv, a general-purpose live streaming platform.
Recognizing Potential: Despite the diverse range of content on Justin.tv, gaming emerged as the most popular category, catching the founders’ attention.
Growth: By 2014, Twitch had grown so popular that it became the fourth-largest source of peak internet traffic in the U.S.
Rebranding: Given the platform’s success, the parent company was renamed Twitch Interactive, and the original Justin.tv was eventually shut down.
Amazon’s Acquisition: In a significant move, Amazon acquired Twitch for $970 million in 2014, marking its foray into the booming live streaming and gaming industry.
Expansion Beyond Gaming: While gaming remains at its core, Twitch has diversified its content over the years, now including creative content, music broadcasts, and more.
Community Engagement: Twitch has always emphasized community input, enabling features that allow gamers to turn professional and enhance viewer interaction.
Integration with Amazon Prime: Post-acquisition, Twitch was integrated with Amazon Prime, offering benefits for Prime members and increasing its user base.
Monetization: Twitch has a robust monetization model, primarily relying on advertising, subscriber contributions, and affiliate programs.
Current Status: Today, Twitch stands as a multi-billion dollar company under Amazon’s umbrella, remaining a dominant force in live streaming and esports broadcasting.