The Wall Street Journal reports that Twitch is struggling to turn a profit and losing users. Here are a few reasons why the platform's future is concerning.
🔶 Twitch does not have a clear-cut plan for competing against YouTube. The platform does offer a unique experience and a highly user-friendly chat feature, but YouTube, with its broad audiences and robust advertising capabilities, is more promising in the long run.
🔶 Twitch let go of the pandemic momentum. In 2020, at the height of the pandemic, the platform saw a huge surge in users but could not turn hype into profit. Now that the video game market is slowing down, Twitch is losing appeal to viewers, creators, and brands.
🔶 Steaming, inherent to the platform's DNA is still long-form content, a complete 180 from the rising trend of short videos. Twitch's internal team is not oblivious to this and is trying to present highlights from streams as short clips. Still, the overall shift in consumer behaviors will make it harder to maintain streaming's appeal.
🔶 Amazon did not prioritize profitability when acquiring Twitch. The company's original plan was to use live-stream audiences to promote other Amazon services. As a result, Twitch is missing a sustainable monetization platform that would allow it to grow independently of the Amazon ecosystem.
I am curious to see what strategy Amazon chooses to address Twitch's profitability concerns.
Will it focus on turning Twitch into an autonomous, Reddit-like entity rather than a pawn in its e-commerce game?
Will Twitch try its luck in other types of live content (live sports are all the rage these days)?
How will the platform find a unique way to bet on short-form content?
All of these are viable solutions that could turn Twitch's fortunes around. Let's wait and see how this plays out.