Twitch - 1 million channels and rising
"We had to prove that this is more than just watching people, that it's really about engagement"
"When we set out to build Twitch and grow it," says COO Kevin Lin, "we certainly wanted it to be a site with mass reach."
Mass reach? From a site that streams videos of nerds talking about stupid videogames for kids?
Over 45 million unique viewers every month. Over a million broadcasters. 106 minutes watched every day by the average user. More than 13 billion minutes watched every month. A 1.8 per cent share of peak US internet traffic, making it the nation's fourth biggest bandwidth user, behind Netflix, Google and Apple but above Facebook.
That sounds like mass reach to me.
Who knew? Who knew that this medium, which we evangelise and enjoy every day, might actually be a thing that people enjoyed watching, as well as playing? I certainly didn't. Maybe it's because I'm an only child who never had to sit and wait whilst a sibling finished the level. Maybe it's because I never got the habit for watching any sports. Maybe I'm just too old. It doesn't matter. I was wrong. Twitch is massive.
"It's not just about getting amazing video on the site delivered around the world, we wanted to have that interactivity; people building meaningful connections around it"
"We wanted it to build on the core tenet of Justin TV, which was to have this great social video platform," Lin continues. "It's not just about getting amazing video on the site delivered around the world, we wanted to have that interactivity; people building meaningful connections around it.
"Justin TV had been getting around 60 million uniques a month or so, so we thought 'let's shoot there or higher'. We'd sized the market and realised that tons of people play games, it's a huge market. Just about everybody with a mobile phone plays games. So we knew that was the addressable market. They're all over the world, so how do you reach them? We started with the key markets, that's just how to grow a business sustainably, so we focused on the US and European markets.
"We've built everything internally. I think the key is having a fantastic team. We've got the best team in video, I think, which we've built over the last seven years. We're on version nine of our software, we're constantly working on that, how to compress things better, how to deliver them better, that's our core, our secret sauce. If it weren't for our core platform we wouldn't be here.
"How can we expand that with partners? We're open minded. It's often a matter of cost and efficiency. So far we've been fortunate in that what we've built has worked really well, so I don't see us having to do that, but there are certain markets where an infrastructure already exists that might be more cost-efficient that building out."
Lin and I are in a 'meeting pod': an open-topped fishtank of a room in Twitch's relatively modest stand at the corner of one of E3's main show floors. It's not a particularly ostentatious stand, but it's not the company's main presence at the show either - mirroring the company's business, Twitch's E3 presence is largely virtual.
Everywhere, monitors broadcast Twitch's E3 coverage, which mixes live demos of unreleased games with interviews, trailers and American sportshow style couch banter. Ironically enough, we're sat underneath a huge screen and a stack of speakers that are blasting out this very channel at top volume, making it extremely hard to hear what Lin says when I ask him about the potential risks of becoming so big, so fast.
"The costs are pretty crazy," he admits. "The investments you have to make are largely around the infrastructure you have to build out. We didn't want to distribute content via third-parties, we knew that wasn't sustainable - it's too expensive. We've been building our infrastructure now for about seven years.
"One of the biggest changes in the last year has been hiring our own sales team, previously we'd worked with a firm in the US, and that was going OK, but not quickly enough to feel comfortable about how quickly we wanted to grow and expand. So that team does an amazing job.
"Now each of those consoles [PS4 and Xbox One] represents about 20 per cent of overall broadcasters. There's about 250,000 unique broadcasters per month from each"
"We've also expanded our subscription program. That allows channels to charge $5 a month to get a suite of features, but it's really about allowing the subscribers to have a deeper interaction with them. They might play games with them, or do special shows for them. So those subscription models put us in a very comfortable position to expand."
That expansion is coming in leaps and bounds. PS4 launched with Twitch already embedded as an integral part of the system, Sony quick enough off the mark to dedicate a button entirely to the function of game-streaming. Microsoft caught up soon after, with Twitch now proving just as popular on the Xbox One. Lin says that the company is well aware of how important that new market could be.
"The main expansion for us right now, where we're going really quickly, is consoles," Lin says, raising his voice over a particularly tenacious bout of small arms fire from the speakers. "The Xbox One and PS4 integration helped tremendously in terms of getting people broadcasting and also viewing. Historically it's been really tough to stream console and mobile games. PC has always been easy because you're just setting up the software. To broadcast console you had to buy a capture card and cabling, then configure all your software. It was very tedious.
"Now each of those consoles represents about 20 per cent of overall broadcasters. There's about 250,000 unique broadcasters per month from each. We're pretty excited about those growth opportunities.
"E-sports continues to grow. It's something we love and support, we'd like to see it expand, to have bigger events, more pros streaming. But really, it's the mid and longtail content that the average streamer is broadcasting. People who are essentially streaming to their friends or looking to meet new friends. Players just hanging out. That's growing very quickly and console is a big part of that."
Given that it's a platform that improves engagement, promotes games and evangelises the Sony and Microsoft eco-systems on other channels, I assume it must have been a breeze to plug Twitch into the PS4 and Xbox One. This is because I haven't the first idea of how you'd go about it.
"Ahhh, I wouldn't say 'easy'," Lin laughs. "What we basically had to show them was that this is something real, this is something that people wanted. We had to prove that this is more than just watching people, that it's really about engagement. How to build an experience that lets people engage with your game when they're not playing it - albeit in 'passive' yet still social way.
"That's what unique about Twitch, so that's the pitch we lead with. 'People are already creating content around games. Is that valuable to you, to your developers?' The answer was pretty much a resounding yes: it's free marketing. So it didn't take too long to talk them through what we can do and the toolset you can build on, but the process of development took a while, it's pretty deep level firmware integration. It's been working out pretty well."
But Twitch's horizons don't end with PC and home console. The company has recently moved into mobile and is looking at the Vita and 3DS as well. "On mobile we just released our first in-game integration, with Asphalt 8 from Gameloft. For now, we're going to be doing that game by game. Handhelds. That's something we'd love to do. On handhelds it's more of a server/CPU concern, but we definitely want to do it. We want to build viewing apps, that's much less CPU intensive than broadcasting."
Twitch is certainly a flexible beast, retaining the agility to go after new opportunities even as it grows so quickly. Even so, its users are sometimes the first ones to notice a new way to use the service. I ask Lin about Vlambeer's Nuclear Throne, a game the Dutch indie offered early access to as a benefit for its Twitch channel subscribers. That story gave rise to a few false headlines about Twitch entering the distribution market, but Lin says he's always happy to see people using the service in new and interesting ways.
"Frankly, we don't always know best. We don't know how to distribute games, we don't know what that toolset would look like, we don't know what the deals would look like. But if someone wants to do it themselves, we'd love to see that"
"I think the key philosophy for us is that we want to deliver a toolset that allows game companies, or media outlets, to do what they want with it," he explains. "We want to do it in a flexible way. Frankly, we don't always know best. We don't know how to distribute games, we don't know what that toolset would look like, we don't know what the deals would look like. But if someone wants to do it themselves, we'd love to see that. We love to see people using Twitch in different ways that we didn't predict: like Twitch plays Pokemon. If people have an idea for a channel that they think would work out, we love to see them try."
As a service provider, Twitch sits in an unusual position of generating money from other people's content. Broadcasters might be playing the games, but they don't own the rights. With companies like Nintendo getting litigious over the use of its intellectual property in YouTube videos, I ask Lin if he's confident that they work closely enough with the publishers to make sure they're on their right side.
"We work really closely with the publishers that own the popular games on the site," Lin confirms, emphatically. "Something we've released recently was with Valve's CS:GO team. They started sending us game data that lets us to create sorts within the directory. What that means is that we're able to tell what skill rank the players are and what map they're playing. So now you can sort by map, or find someone around or just above your skill level, or the top levels. You can expand on that greatly, it's sort of a test for now. You could sort by weapon, game format, character etc. So we want to keep layering that metadata.
"For the most part, those IP owners have clauses in their terms of service allowing the use of content to create things around their games, so we haven't really run into issues like that. In fact, Nintendo just yesterday used their own stream to broadcast Smash Brothers and got 60,000 concurrents, so I think even they see the value of marketing through a livestream video platform like Twitch. We have a good relationship.
"Nintendo just yesterday used their own stream to broadcast Smash Brothers and got 60,000 concurrents, so I think even they see the value of marketing through a livestream video platform"
"They're also constantly asking us questions. How do we work with the community to grow content? What can we do better internally? Can we help you promote these streams? They're really embracing it."
The other side of the business is obviously the players. Twitch relies on user-generated-content to survive and has already created a stable of well-remunerated and internet-famous celebrity players. Players like Trump, Tr1ck and ManVsGame are the platform's bread and butter, so how does Lin make sure that the cream rises to the top and stays there?
"We're spending more time these days on what we call partner development. Of the million and change broadcasters about 6400 are partners. They go through a process where we vet them and they have to meet certain quantitative standards; average number of viewers, views per month, consistency of broadcasting; then we'll review that and ensure it's a good representation of the community.
"We're trying to spend more time doing this. Previously we didn't really have enough resources but now we're building this book, almost, for partner broadcasters. How do you maximise views? How do you use a greenscreen, if that's what you want to do. What are the best tools and hardware to use? Then on top of that, things like when do you run ads, how do you grow subscriptions, where do you promote yourself, when's the best time to broadcast?
"The key to this is: just start! Fire it up, play the games you love. Don't play what you think is popular if you don't play it normally"
"So we've learned those best practices over time, by watching a lot of the content ourselves, by looking at the data. That's helped to understand how to embrace new broadcasters, how to bubble them up, how to help them grow."
I wonder, briefly, just how many people would want to sit and watch me drive yet another Dwarf Fortress into madness and ruin. Lin offers me a few tips.
"The key to this is: just start! Fire it up, play the games you love. Don't play what you think is popular if you don't play it normally. Watch a lot of content, the top streamers, pay attention to how and when they stream.
"You have to decide what you want to be. Do you want to be educational, funny, cutting edge? Work out your personality, listen to your audience. Reach out to us, too. Speak to people who you think can help promote you. The key is to get started and to be willing to adapt."