Last week, FastCompany reported on one of the breakout stars from Cannes Lions, the international advertising festival. Perhaps unexpectedly, the company being hailed as a big winner from its time on the French Riviera was none other than Twitch.

The streaming website had been parading the success of a recent partnership with Hershey, which the candy company's head of integrated and media communications had called "unbelievable." From the perspective of advertisers, Twitch is seen as "a digital platform that speaks old-school advertiser language." From the perspective of Twitch viewers, that means more Reese's ads being played while trying to tune into your favorite stream. Many viewers may have noticed that, despite preventing video ads on YouTube or other platforms, their AdBlockers have not had recent success on Twitch. It's no surprise this change has come alongside the breakout of Twitch's advertising department as a new and exciting revenue opportunity for the company. While cracking the ad block code may be advantageous for Twitch, the change has come at a cost for both viewers and streamers on the platform.

How the unblockable ads work

Twitch's video ads can be prompted in two ways; either manually by the broadcaster of a stream, or automatically by the platform when a viewer loads into a livestream's channel. The majority of video ads on Twitch are produced by the latter. Previously, the ads operated similarly to those on YouTube meaning they could be easily avoided by the average ad block extension.

In late 2016, Twitch began rolling out what it calls SureStream. The specifics of how SureStream works aren't known but the company's website describes it as "a new video technology that brings more of the ad delivery experience by seamlessly weaving ads directly into the broadcast." Whatever the technicalities, the process allows Twitch to deliver ads that are hard, if not impossible, to block via the average browser ad blocker.

SureStream's implementation seems to have been gradual. As viewers began noticing holes in their AdBlock efficiency, popular workarounds in the form of updated blockers and routing content through VLC players became a go-to for an ad-free experience over the past year. But both methods have recently begun to fail, showing that SureStream is winning the blocking battle. Though more exploits may arise in the future, the more complex the method, the less likely the average viewer is to use it.

How it hurts viewers

If Walker Jacobs, Twitch's chief revenue officer, is aware of one thing, it's that Twitch's popularity lies within younger generations. "We reach an audience that have migrated away from traditional TV in Gen Z and Millennials," he told FastCompany at Cannes. His grasp on why younger generations are favoring Twitch–opposed to traditional TV–is on much less of a sound foundation.

via: thedailynighthawk.com

While Netflix might be the future (or present, by now) of television, Twitch has carved itself out as the future of live television. Netflix's lack of commercials has undoubtedly played into a user experience that promotes and allows binge-watching, a foundation to its brand and success. Twitch is not dissimilar in the way it allows users to indulge in content in a way that had never been present on traditional television. Returning to the ad distribution of old-school TV, however, undersells how much of a role an ad-less experience played in Twitch's early success and the website's ability to market itself as a form of television that is superior to that delivered by a cable. Brute force, unskippable ads made possible again by SureStream, open up an avenue for Twitch to monetize content the same way traditional TV was able to, a prospect that seems too good for the company to pass up, even if it is bad for viewers.

The reintroduction of commercial-like ads directly affects one of the website's core user experience mechanics. Ads are prompted on an irregular basis when a user loads a broadcast's stream. Though it's hard to pin down the exact frequency at which Twitch prompts its commercials, the trigger for such ads occurs when a user selects a stream to watch (assuming the streamer themselves has not prompted a commercial).

Much like being bored in front of a television and flipping through channels, web-based television like Twitch allows users to interact with channels quickly, and smoothly sift through a massive library of content. Switching from streamer to streamer allows users to not only watch and engage with multiple streams over the course of a viewing session, it allows viewers to more easily stumble upon new or lesser known broadcasters. Previously, the only barrier between a viewer and a stream was the time it took to load a web page. With SureStream, users are inevitably punished for flipping through streams.

Live-streaming itself also incurs downtime in a way other forms of video entertainment do not. Every livestream has lulls in action, whether it is due to breaks between matches, loading screens, queue times or streamers taking time to interact with viewers, livestreams are unlike television shows or even YouTube videos that are able to edit out moments of downtime. While some users may be dedicated to a single stream through its highs and lows, Twitch's previous ease of selection made live-streaming's inherent downtime issue less of an obstacle. Surfing multiple streams makes Twitch's content more engaging. As users become even slightly punished for a stream surfing user habit, the medium's natural snag becomes more apparent.

How it hurts streamers

From the announcement of SureStream to Twitch making Prime subscribers no longer immune to ads, the company has justified its slow re-implementation of commercials largely through one defense: blocking ads hurts streamers. This justification, and the use of its content creators as a shield for its own financial interests, is both short-sighted and misleading.

via: variety.com

Because ad revenue was minimal in the pre-SureStream era of Twitch, streamers were forced to monetize their streams in newfound ways. Direct donations to a stream and monthly subscriptions became the early foundations to both a streamer and Twitch's monetary exchange. Almost a decade later, other digital media mediums are trying to replicate the new-wave monetization that has been at the foundation of Twitch, all while Twitch itself is trying to venture back in time. Take, for instance, YouTube, a platform whose content creators rely almost exclusively on video ad revenue and the juxtaposition of its many, many "adpocolypses", where users are punished for the company's missteps. Or take media outlets like the New York Times who have pivoted away from traditional ad-funded revenue and towards a subscription-based model. Throw in the omnipresence of Patreon in 2019 for everything from podcasts to newsletters and it's easy to see how Twitch not relying on advertising money through its early years has contributed to its growth through a decade of uncertainty in digital media.

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Cutting corporate ad money out of the situation in favor of a direct viewer-to-streamer monetization, however, doesn't seem to be Twitch's goal. The company has slowly reintroduced itself into what felt like a healthy financial ecosystem for its viewers and content creators: those who wanted to support a stream could do so easily and directly from a subscription or donation. The introduction of "Bits"–a form of Twitch currency that can be bought by viewers and gifted to streamers–allows the company to take a cut out of donation money, which was otherwise funneled through PayPal. Recently, the company also introduced a "Bounty Board" program, which allows streamers to easily claim sponsored opportunities from gaming companies or Twitch itself. Though the program might alleviate the sponsorship process for streamers who might otherwise have to hire an agent and lawyer to finalize such opportunities, the program is another instance of Twitch interjecting itself into the revenue streams of its users on the good faith that it has their best interests at heart.

Last month, Byron "Reckful" Bernstein briefly revealed his bounty board on stream, showing an $8,000 opportunity which could be claimed simply by playing League of Legends for one hour. While the payouts for such simple sponsored content seem extraordinary, the system, of course, does not disclose how much Twitch itself is being paid by gaming companies in exchange for the viewership bumps. Where a traditional client contract in the entertainment industry might reward an agent with an agreed payout (say, 5% of total earnings), Twitch does not disclose how much it earns while acting as the agent for every streamer who uses its bounty program.

via: topclassactions.com

Twitch interjecting itself into the revenue streams of its creators over recent years may have been necessary for the company to grow but doing so alongside an increase of corporate sponsorship paints a picture that is seemingly unnecessary and especially disadvantageous for smaller streamers who also contribute to the 48 billion minutes worth of video content produced each month which the company is able to monetize. Like a single Spotify play paying out roughly $0.006 per listen, the revenue for small streamers is microscopic, all while the unskippable ads make it less likely that a new viewer will be willing to sit through a 30 second preview of whatever dire Amazon Original is streaming next month just to give the stream a chance.

Ultimately, Twitch has had things pretty good on its way to a $20 billion valuation but the reintroduction of advertising revenue into its platform can't help but feel like the watershed moment so many tech giants reach nowadays where their pursuit of greater profits comes at the cost of user experience. While Twitch may not be selling out its users personal information to shady interests, continuing down the path of those writing checks at Cannes Lions puts in jeopardy a platform that, while certainly not perfect, has been integral to the growth and future of the gaming industry.

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