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Twitch "isn't profitable" admits CEO, in wake of recent layoffs
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this post was submitted on 12 Jan 2024
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Is it the infrastructure costs? I imagine that costs quite a bit
They pay themselves for infrastructure costs effectively, so it would be the wholesale price. Would love to see their actual accounting book, public data says they made 2.8 billion, would love to see where it went.
I’ve heard (yes anecdotal) that on the books, Twitch pays AWS full retail for server time.
Makes me wonder if that’s done on purpose? Amazon just wants to kill Twitch and rent out IVS (their internal system) to other streaming platforms (like they do for Kick). THAT is outside money coming in.
Why should AWS subsidize Twitch?
From the point of view of AWS, they make money whether they host Twitch or some other streamer. If Twitch can't make money paying retail hosting, the decision of what to do with it has to be made by people who control Twitch.
Because they kinda do it for every service of them, the point is to spread to all the markets with subsidies until kill the competition, and then keep a marginal profit to avoid competition while still makes a marginal profit (what in scale is a big profit anyway). This is usually what these megacorps do.
Do they? I wouldn't be surprised if AWS even charges Amazon.com full retail for hosting. The point is the company has a lot of different business units that report up to the CEO, and business units generally act like mini companies.
The accounting of charging full retail to other business units is a lot cleaner than giving preferred rates and making it harder to understand the finances of what is going on with the different business units.
A CEO may be willing to operate a business unit at a loss for strategic reasons, but they have to understand that said business unit is costing the company money.
Tech companies have rate cards for valued customers or internal use. Netflix don't pay retail price for AWS, nor do Amazon subsidiaries.
Source: Work there, and have worked at companies with yearly defined rate cards. If Twitch are paying retail price, they're being mugged.
Imho you're wrong there.
Amazon has every incentive to write down Twitches infrastructure cost as far higher than it needs to be, to make Twitch look unprofitable.
Both to audience and shareholders. It'll allow them to force more advertising and push up sub prices while making the main corporation revenue look better.
This while the long term plan looks to be more about getting an excuse to shut down the public facing side of Twitch and get rid of having to deal with the streamers and viewers as direct clients and renting out streaming infrastructure to other streaming sites instead.
They want to condense their streaming services to simply be simple products they can sell or rent out to other sites rather than having to deal with a load of consumers and legal liabilities that come with them.
Well, until they can beat YouTube live and their game streaming there they have to compete still
They recently left South Korea too.
Data is surprisingly cheap. It's more than likely just reinvesting any profits into growth to boost stock price/investment. A lot of companies are hitting the point where growth is leveling off, so they've switched to cutting costs
Bandwidth, which you need for streaming is not cheap
They thought the party was going to last forever, so they ordered a bunch of jumbo pizzas and kegs
I mean it's more like they paid themselves a bunch of bonuses and hired super duper growth hacking experts or whatever, and now they can't pay for them, so god forbid they cut from the top