Waterhouse VC August update: Twitch vs. Kick and the rise of gambling streams as entertainment
In collaboration with iGaming NEXT, the August edition of Waterhouse VC takes a deep dive into the battle between Twitch and Kick for streaming supremacy.
Twitching into gear
Streaming involves transmitting media content, whether it’s live or pre-recorded, through the internet for immediate playback on computers and mobile devices.
Streaming allows audiences to connect with content creators across gaming, art, music, sport and several other categories.
A viewer can engage directly with the streamer through chat functionality and can pay them if they enjoy the stream, effectively monetising streaming for the content creator.
The rise of pro gamers and dedicated fan bases has boosted user numbers on streaming platforms like Twitch, which Amazon bought in 2014 for $970m, just three years after its 2011 launch.
The opportunity in streaming is vast, with just a handful of platforms dominating the $3.8bn industry.
Audiences converge to take part in gameplay, tutorials, and social chat rooms, hosted by their favourite gamers.
Most platforms are free-of-charge for both streamers and their audiences. The platforms monetise their audiences through advertising and by taking a portion of premium subscription revenue and merchandise sales.
For example, there are three tiers for Twitch users who want to subscribe to a streamer: $4.99, $9.99 and $24.99 per month.
In the case of Twitch, subscription revenue was split 50/50 between the platform and the streamer until June 2023 when the split was adjusted to 70/30 in favour of the streamer (details here).
Twitch also has ‘Bits’, which is the platform’s internal currency used by viewers to support/tip the streamer.
Revenue generated through Bits is split between the streamer and the platform according to several factors, such as the streamer’s popularity and their location.
See more statistics about Twitch at this TwitchTracker.
There are several reasons why Twitch adjusted the subscription revenue split with streamers, one being that the vast majority of streamers believe that they are underpaid for their work.
Kicking streaming on its head
Kick was launched in January 2023 and is gaining significant momentum among both streamers and viewers.
The platform is offering extraordinarily lucrative terms to streamers with a 95/5 split in favour of the streamers and also allows the streamers to keep all tips.
One of Kick’s key differentiators from Twitch is the platform’s positive attitude towards gambling.
In September 2022, a Twitch streamer admitted that he had borrowed money from popular creators under false pretences to fund gambling.
This event, combined with an existing negative perception of gambling streaming, resulted in Twitch banning most gambling streaming (excluding sports betting and poker), effective as of 18 October 2022.
The company said: “We’ll be making a policy update on 18 October to prohibit streaming of gambling sites that include slots, roulette, or dice games that aren’t licensed either in the US or other jurisdictions that provide sufficient consumer protection.”
In contrast, Kick’s gambling content is among the most popular content on the platform, which has successfully attracted some of the most popular streamers away from Twitch.
For example, ‘Trainwreckstv’ switched to Kick.com when Stake was banned from Twitch and in June 2023, ‘xQc’ inked a $70 million two-year deal with Kick.
There is a huge global demand for viewing gambling streams and Kick caters to this demand. As we have seen with the gambling industry itself, when bans arise, consumers still often find a way to gamble and the industry remains resilient.
The concept of watching gambling as entertainment is a nascent industry segment, and as with any new industry, regulation develops swiftly.
Easygo Entertainment Pty Ltd (Easygo) is “the Australian powerhouse behind some of the world’s fastest growing online brands including Kick and Stake” (Easygo.io).
Kick’s registered legal entity is Kick Streaming Pty Ltd and its only shareholder is Easygo, which was established in 2016 by Ed Craven and Bijan Tehrani.
Consequently, we can be confident that Kick will not ban gambling streaming. We have discussed Stake and the extraordinary growth of crypto wagering in several previous newsletters, such as May 2023.
Kick continues to attract fresh streamers, with its alluring 95/5 revenue split supporting the platform’s growth from 9,000 active channels in January to 67,000 active channels in April.
Over the same period, the platform quadrupled its monthly number of hours viewed, from 12.8 million to 51.8 million (Streams Charts).
This annualises to 620 million hours, which is just 2.8% of Twitch’s size. However, with such strong growth and a positive attitude towards gambling streaming, Kick poses a formidable challenge to Twitch’s dominance.
