Monday, April 23, 2018
Business

Through Twitch, video games come of age as spectator sport

NEW YORK — Video games have been a spectator sport since teenagers crowded around arcade machines to watch friends play Pac-Man. But today there's Twitch, the online network that attracts millions of visitors, most of whom watch live and recorded footage of other people playing video games — in much the same way that football fans tune in to ESPN.

Twitch's 55 million monthly users viewed over 15 billion minutes of content on the service in July, making Twitch.tv one of the world's biggest sources of Internet traffic. Fans watch for the same reasons ancient Romans flocked to the Colosseum: to witness extraordinary displays of agility and skill.

Jacob Malinowski, a 16-year-old Twitch fan who lives outside Milwaukee, admits that some may question the entertainment value of Twitch's content.

"(But) I think it's interesting because you get to watch someone who's probably better at the game than you are," he says. "You can see what they do and copy what they do and get better."

Amazon's commitment to purchase Twitch for about $1 billion this week is an acknowledgement that the service's loyal fan base and revenue streams from ads and channel subscriptions present enormous opportunity.

Most Twitch viewers are gamers themselves who see the live and recorded video sessions as a way to not only sharpen their abilities, but to interact with star players in chat rooms.

Indeed, Twitch fans are the stuff of advertisers' dreams. They are mostly male and 18 to 49, an important demographic for advertisers. Twitch's so-called user engagement is high. Nearly half of visitors spend 20 or more hours a week watching Twitch video, according to the company.

"You've got a hyper-growth platform with a niche audience," says Nathaniel Perez, global head of social media at advertising firm SapientNitro. "It's basically the best you can get, from an advertisers' perspective."

As a result, Twitch commands premium prices from advertisers. The company's cost per 1,000 views, or the amount an advertiser pays to run one video ad 1,000 times, is $16.84 in the U.S., well above the average of $9.11 that advertisers pay for video ads placed on other sites.

Twitch can be lucrative for talented gamers, too. The site allows some who set up channels —what the company calls "broadcasters"— to charge $5 monthly subscription fees to viewers. Plus Twitch gives a portion of all ad revenue to broadcasters.

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Published: 04/23/18