Twitch SWOT Analysis

Twitch SWOT Analysis

Twitch (or twitch.tv) is an American company that specializes in a video live streaming service platform. This platform primarily focused on gaming streaming or gamers in general. However, it has expanded its target audience. Currently, Twitch supports live streaming for gamers, artists, and other general audiences. The company behind the platform is Twitch Interactive, which is a subsidiary of Amazon.com, Inc.

Twitch started its operations in 2011 as a spin-off of the general-interest streaming platform Justin.tv. However, Twitch accumulated more users compared to Justin.tv. By 2013, the company had over 45 million unique viewers. The company kept growing its audience significantly and became highly successful. Due to its unique business model and significant potential, Amazon acquired the company in 2013 for $970 million.

Twitch has been operating on its own over the years. However, the company has various integrations and synergies with related Amazon products. Over the years, Twitch has captured a significant portion of the online video streaming market. It is currently the top name in the industry, having more than half the overall market share. Its primary competitors, YouTube and Facebook, have a lower share in comparison.

In 2019, Twitch reported a total of 41.5 million users. The primary product that the company offers is online video streaming through many creators. Currently, the company has over 9 million unique creators that stream each month. The service also gets over 26 million viewers every day and almost 7 million unique streamers every month.

Twitch is undoubtedly the industry leader when it comes to live video streaming. The company generated over $217 million in revenues in 2020, which was its highest to date. Similarly, experts believe the company will surpass this number in 2021 by a large margin. However, this increase is primarily attributable to the COVID-19 pandemic. Some experts worry the company’s profits will decline once the pandemic is over.

In this article, we cover the detailed SWOT analysis of Twitch consisting of the company’s strengths, weaknesses, opportunities, and threats.

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Twitch – At a Glance

Given below is Twitch’s company profile.

NameTwitch Interactive
Websitewww.twitch.tv
FounderJustin Kan, Emmett Shear, Michael Seibel, Kyle Vogt, Kevin Lin
Year founded2011
Chief Executive Officer (CEO)Emmett Shear
Chief Operating Officer (COO)Sara Clemens
HeadquartersSan Francisco, California, United States
Type of corporationSubsidiary
Revenues (2020)$217.81 million
Key products/ servicesOnline video streaming
Key competitorsYouTube, Facebook Gaming, Mixer, Periscope, Vimeo, YouNow, StreamYard, Dacast, Restream
Parent companyAmazon.com, Inc.

Twitch’s Strengths

Strengths are internal factors that provide a company with a competitive edge over others. These factors come from within the company and may include efficiencies, exclusive resources, achievements, etc. Some of Twitch’s primary strengths include the following.

Brand name

When it comes to the online streaming market, Twitch is undoubtedly the biggest name. The company has developed substantial brand recognition over the years due to its quality services. Being one of the first gaming streaming services also provided it with a significant boost. On top of that, the company also works under Amazon, which further enhances its reputation.

User base

Twitch gets over 26 million viewers on its platform every day. That roughly translated to almost 800 million users each month. On top of that, the company has more than 45 million users and over 9 million active content creators. All of these factors give Twitch a significant boost. Some other competitors have higher numbers. However, they don’t have the same number of content creators or live stream viewers.

Brand loyalty

Not only does Twitch have a high number of streamers and viewers, but its users are also loyal. This brand loyalty comes from the company’s exceptional services. Similarly, having one of the largest content creators bases also allows the company to attract more users. Most viewers stay loyal to the company, making it one of the best names in the industry.

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Twitch’s Weaknesses

Weaknesses are the opposite of strengths. These include internal factors that a competitor does right, but a company does not. Weaknesses hinder a company’s growth potential and can affect its business adversely. Some of Twitch’s primary weaknesses are as below.

Pricing

An area of major concern for Twitch and its streamers has been the high prices charged by the company. For example, the company charges a commission of 50% on subscription fees paid by viewers. In comparison, some competitors take a smaller commission. Most streamers already pay these fees. However, given better options, these streamers switch to competitors.

Reliance on content creators

Twitch has a significant user base. However, these users usually follow content creators. If these content creators leave Twitch’s platform, they will take most of their viewers with them. Therefore, Twitch relies heavily on streamers to bring in viewers. The company itself does not draw enough viewers. Consequently, it has to rely on content creators to help its business.

Free services

Twitch provides most of its services for free. Viewers can watch any stream without having to pay subscription fees. Although there is some exclusive content, viewers can watch most available content. It means these viewers do not contribute to the company’s revenues. Its free services create a substantial weakness for the platform.

Twitch’s Opportunities

Opportunities are external factors that may occur in the future and become a strength. These factors usually come from the external environment. Companies need to identify them before other competitors can convert them into their strengths. Some of Twitch’s opportunities consist of the following.

Partnerships

Twitch already has a well-known platform and a large user base. However, it can benefit further from forming mutually beneficial partnerships with other industries. By doing so, Twitch can bring more users and create more segments within its products. The company still primarily focuses on gamers. However, it can benefit more from other unexplored areas as well, for example, sports broadcasting.

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Innovations

Twitch has been one of the leading names in the industry when it comes to innovations. However, the world of technology is changing every day. Twitch has the opportunity to innovate its products to provide more features to both content creators and viewers. By doing so, the company can significantly boost its customer base and revenues.

Exclusive contracts

As mentioned, one of Twitch’s weaknesses is its dependence on streamers. However, the company can offer content creators exclusive contracts, which will bind them to the platform. By doing so, Twitch can ensure that its viewers stay with the platform. On the other hand, the streamer will also get additional perks and benefits.

Twitch’s Threats

Threats are external factors that can result in future weaknesses. Like opportunities, threats exist for all companies within a market or industry. However, companies must identify them on time to prevent them from materializing. Some of Twitch’s weaknesses include the following.

Competition

Twitch already holds more than half of the live video streaming market. However, that makes the company a target for its competitors. Some big names such as YouTube and Facebook have already ventured into the market with their products. The competition will rise even further due to the growing popularity of such platforms.

Adblocking

Adblocking technology has existed for a long time. Through adblocking tools, users can remove ads from websites, stripping them from any ad revenues. Twitch relies on similar income. Therefore, adblocking poses a significant threat to Twitch’s revenues and business model. It can also reduce the number of advertisers the platform gets due to the low exposure.

Digital security

Any company that operates a digital business model faces the issue of digital security. Twitch is also a company that can suffer from such issues. The company holds a significant amount of user information, including personal and financial data. If any unauthorized individuals gain access to this information, it could spell trouble for the company.

Conclusion

Twitch is the leading name in the live streaming platform industry. The company holds more than half of the overall market share. Furthermore, Twitch hosts millions of content creators and viewers. The company has been on top of the market for many years. There are several factors that contribute to its success. Twitch’s SWOT analysis, detailing those factors, is given above.

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