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Twitch "isn't profitable" admits CEO, in wake of recent layoffs
(www.eurogamer.net)
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this post was submitted on 12 Jan 2024
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This isn't surprising in the least. They've been pushing more and more ads recently; trying to get streamers to run them more often. I hate ads, so I have always opted for a short pre-roll so that when its done, viewers won't have to worry about ads anymore. But I think Twitch will eventually force streamers to run ads every half hour, no matter how many people they scare off.
People don't realise how expensive video streaming is, especially at a larger service's scale. There's no just way to have a fully free service with no ads (or even just minimal ads).
It's not even the servers or VOD storage. It's the bandwidth.
Live streaming isn't cheap. AWS have example pricing:
https://docs.aws.amazon.com/solutions/latest/live-streaming-on-aws/cost.html
Now, expect twitch to get a hefty discount. Even if they are paying 30% of that cost (and I've pulled that number out of my ass), that's $500 per hour for a 10k viewer stream (and that's assuming an average of 4mbps bitrate, not the source 8mbps).
A 10k (8mbps bitrate, so 80,000mbps or 80gbps total sending - egest? - bandwidth) viewer streamer is going to be on a 70/30 split.
So for a $5 sub, twitch is getting $1.50.
So that's 330 subs per hour, or 5.5 subs per minute, or 1 sub every 11 seconds to cover the bandwidth costs.
AWS EC2 outbound bandwidth calculators align pretty closely with these costs, so it's not like "video connections get the cheap networks" or anything.
It's all of that plus the cost of the servers, electricity, employees, etc. I'm not sure if they use AWS, but they'd definitely be using a premium blend of upstream providers (no second-rate providers like Cogent, Psychz, M247, etc) to avoid latency and reduce buffering, which I'm sure is what AWS does for their video streaming service too.
I wouldn't be surprised if Twitch hit egress bandwidth usage in the order of terabits per second during peak times. Having that much bandwidth available is not cheap.
The tricky thing with streaming is that the data can't be cached, since it's streaming in real-time, so it'd cost way more than stored on-demand video like YouTube. Big companies like Netflix, Facebook, Google, etc give large ISPs some of their caching hardware (usually for free). It significantly reduces bandwidth costs for both the ISP and the service, as YouTube and Facebook are often over 50% of an ISPs bandwidth usage.
If you look at a popular YouTube video, or a popular video or image on Facebook, it's likely coming from within your ISP's network, which is practically free for them. The caching box only needs to download it once from the upstream servers. None of that is doable with a live stream.