Watch the throne: Twitch explains why they’ll stay on top of the streaming business
Earlier this week we published a story in The Cut about the achievements of Twitch, the streaming company that has become an ubiquitous part of the infrastructure of the eSports scene. There was a caveat in that story we republished, however, that suggested that Twitch could face issues in the near future because of how many new competitors are vying for its spot at the top of the heap.
It should come as little surprise that Twitch disagreed with this notion, and they contacted the Report hoping for a chance to explain why they will not be moved from their throne atop the young video game streaming business.
Obviously, it's doubtful we'll get a completely clear view of the business from just one higher-up at Twitch, but it's an interesting look at what it takes for a company to dominate the highly popular streaming business we already take for granted, and what it took for Twitch to do that.
Crossing the streams
“We built our own operating system over the past six years,” said Kevin Lin, Chief Operating Officer at Twitch. “When we were growing up as a company there were a lot of competitors. We were up against Ustream, Livestream etc. They all started just around the same time, and many of us were using the same content delivery networks. And the cost was tremendous.”
Content delivery networks (CDNs) can be thought of as a middle-man between a streaming service and the viewer. Lin said the cost was also huge because these companies were still building their infrastructure, a process that seems to be very much ongoing even in Twitch's sixth year. These types of “tremendous” costs are something every company would still face today regardless of Twitch paving the road to success.
“We made the conscious decision to say, 'if we're going to survive as a company we've got to bring this in-house,'” said Lin about removing the costly middle-man from their process. “Not only is that important because of costs, but because the more control you exert over the pieces of an architecture as big as a live video system, the better control you have over time for software improvements, cost efficiency, and delivery in general.”
The part of the republished story that Twitch took the most umbrage with was the notion that Riot or Blizzard could “just create their own streaming network” to cut out Twitch as a middle-man, and I got more than a few words from Lin about why that would be a terrible idea.
“Even if you get the best deals from these CDNs you still can't meet the high-traffic demands of some of these live events,” he said, emphasizing that you need a specialized platform in order to cater to gamers. You can't simply give them any old stream. Beyond that, he said that Twitch now actually has a higher streaming capacity than some of the CDNs that a company would hire out to.
“We built a super-specialized platform for live video that we also specialized even further for gaming video,” he said. “Gaming requires a much higher bitrate, and the expectation of quality from gaming users is that they want crisp, HD, high-fps viewing. CDNs that provide for general streaming are optimized for 30-50% lower bitrate, low-demand stream. Sports just don't need high FPS visuals, whereas when you're watching StarCraft you want to see the character models, you want to see the environment. That's a critical part of the experience, and that's something that we've invested millions of dollars in building over the last six years.”
He boasted that they've created a system where their hardware and unique software can work in harmony in a unique way, and allows them to exert total control over the entire process.
More than just streams
“Scaling video is one thing; scaling a website is another,” said Lin. “Scaling a website to meet the instantaneous video demands like we have is a whole other project [...] When an event starts up like the International 3 or a Riot LCS event, what happens? Literally 500,000 people try to connect at the same time. They're waiting on the site, refreshing, and waiting to connect. And it can completely destroy a website. We've actually had to build our website to scale to that sort of demand. That's another thing a lot of people don't even think about.”
For Lin the list of hurdles and obstacles for a streaming service go on and on like he's having flashbacks to the nightmares of Twitch's early days.
“It even includes things like chat, which doesn't have the same magnitude of simultaneous connections, but we've got tens of thousands, if not hundreds of thousands of people in chat. That's a whole other part of the system, and it's an important part of the system because chat is one of the most important engagement centers.”
When he's reached the end of his laundry list of potential pitfalls, he stops and raises a question.
“If you're a gaming company, are you really going to dedicate that many resources to satisfy that demand when it's not a day-to-day need for you?”
Blizzard can't hang
For Lin, it goes even further beyond just the difficulty of the production. There's another major factor to consider. In essence: all the effort required to build this infrastructure would be completely pointless for a company like Riot or Blizzard.
“Why do gaming companies advertise on editorial sites?” he asked. “They want to reach the general gaming populace. So if you're Blizzard and you want to advertise Hearthstone, you could buy a lot of advertising. Or you could get a lot of your players to play on Twitch, and reach the 45 million people a month who are coming to the site.”
“If they build their own platform, what happens? People who come to your platform already know your game,” Lin said. “Chances are they've already bought and play it. You're no longer tapping into the full set of gamers that aren't playing. It's a huge benefit to Twitch.”
As for smaller, up-and-coming challengers, Twitch still has big advantages over them that suggest they wont be forfeiting their lead in the market any time soon.
“Right now with the fresh batch of competition we have out there, [our advantage is] a lot about scale,” said Lin. “Scale is a big, big competitive advantage we have since we've been building this for six years. It comes with service advantages, it comes with huge cost-efficiency advantages, it comes with revenue-scaling advantages.”
It's not all about the business end of things though, simply being the market leader is an advantage unto itself. When people know you're a major success it makes them much more willing to work with you. There are things like brand association to consider, built-in trust, as well as partners being pre-educated about your business.
Lin's view, of course, is naturally biased towards Twitch, but it's interesting to get a closer look at the challenges newcomers will face as they attempt to challenge the almighty king of game streaming. As well as the reasons why Riot and Blizzard wont be bringing their Twitch streams in-house any time soon.
There are certainly companies that are ready to tackle these challenges too. Just hours after Twitch contacted the Report to discuss the original story, we were contacted by Azubu as well. Azubu is another up-and-coming player in game streaming with deep roots in the eSports scene. And video giant YouTube is also taking steps into video streaming as well.
There are a lot of obstacles between them and the throne, but they're chasing it regardless.