Twitch plans to cut subscription revenue for some top streamers in push toward ads

Twitch plans to standardize its revenue sharing agreement with streamers, reshaping the earnings landscape for top creators who have historically been able to pocket a bigger portion of the money they generate through paid subscriptions on the platform.

In a blog post on Wednesday, Twitch President Dan Clancy explained that while the “vast majority” of streamers have a revenue split of 50/50 for paid subscriptions, in the past a subset of creators were offered premium subscription terms that cut them a better 70/30 deal. Twitch subscriptions start at $4.99 per month, offering viewers a way to support their favorite streamers while receiving special access and perks in return.

“This isn’t something we’ve talked about publicly, but such deals are common knowledge within the streamer community,” Clancy said. Apparently Twitch didn’t really have hard and fast criteria outlining who got the better revenue split. The company stopped bringing new streamers into the sweetheart deal more than a year ago, according to Clancy, but anyone with better terms got to keep them for the time being.

In April, Bloomberg reported that Twitch was exploring ways to boost profits by making changes to the revenue sharing agreements with its top tier streamers. Twitch noted that more than 22,000 streamers on its feedback forum have asked the platform to move all creators to the 70/30 subscription split, but instead the opposite will happen.

“As we reflected on how we handled these premium deals, we realized a few problems,” Clancy wrote. “First, we had not been transparent about the existence of such deals. Second, we were not consistent in qualification criteria, and they generally went to larger streamers. Finally, we don’t believe it’s right for those on standard contracts to have varied revenue shares based on the size of the streamer.”

Clancy says that ideally “all streamers would be on the same set of terms regardless of size,” but switching the terms outright would disproportionately hit some core Twitch streamers who helped build the platform into what it is now.

The solution Twitch has landed on for now is to let streamers with the premium deal keep 70% of their first $100,000. After that, they’ll be defaulted back to the non-premium 50/50 revenue split. The changes will be implemented after June, 2023, but only when a given streamer’s contract comes up for renewal.

“For those who are affected, we wanted to make sure the impact was minimal — not just by giving them ample time before the deal goes into effect — but also by offering an alternative way to earn revenue,” Clancy said.

That alternative is Twitch’s ad revenue program. In June, the company announced that it would shift from a fixed payment model per 1,000 ad impressions to a “percentage-based revenue share model” that gives streamers 55% of revenue for every ad they run. Twitch argued that the change to ad payouts would ultimately pay most streamers 50 to 150% more for the advertising they feature on stream. The company announced at the time that the change doesn’t just affect Twitch Partners — streamers in Twitch’s lower tier Affiliate program will also be offered the 55%.

In August, Twitch dropped its exclusivity requirements for Twitch Partners — the creator tier that unlocks the full suite of monetization tools on the platform. The change allows top creators to also make money on rival services like YouTube, though still prevents them from simulcasting full streams to most social apps. The change could help Twitch keep its top talent on the platform, particularly with changes to its revenue system on the way, though YouTube’s own 70/30 subscription revenue split is about to look more attractive given the changes.

If that all sounds above board, it might not be quite so simple. In spite of the push for uniformity and transparency, Twitch still carved out some wiggle room to negotiate with top streamers who aren’t likely to be pleased with eventually seeing their subscription revenue dip by 20%, even with the changes to ad revenue.

“It’s a reality of our business that we will, in rare cases, continue to negotiate custom agreements on a case by case basis,” Clancy wrote. “However, we have been reducing how often we offer these deals and the total value of these deals.”

Twitch plans to cut subscription revenue for some top streamers in push toward ads by Taylor Hatmaker originally published on TechCrunch

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