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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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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.