Get Rich or Die Streaming: Making Money on Twitch.tv

Thousands of people are turning a dream of playing video games into a full-time job.

October 8, 2015

It takes dedication to stand in line for three hours, but hundreds did – voluntarily – at TwitchCon, Twitch.tv’s first convention.

The line was for TwitchCon merchandise. T-shirts were $22 – $25. The next day they were $150 on eBay.

If you’ve never heard of Twitch.tv, know this:

  • Amazon paid $970 million for the service last year
  • Twitch has 1.7 million video streamers who broadcast themselves playing video games
  • They get a 100 million visitors a month
  • They’re the geek version of YouTube
  • More than 20,000 fans paid to attend TwitchCon last week.

“This is the Wild West,” was something I heard over and over at the convention.

But the steel and glass levels of San Francisco’s Moscone Center were about as far as you can get from cowboys and dusty plains. I concluded people meant that Twitch is the new “gold rush.”

“Twitch is unexplored territory,” celebrity Twitch broadcaster CohhCarnage said during his panel about finding a manager.

Yes, popular streamers need to consider getting managers now.

“There are ways to provide value that probably haven’t even been thought of yet,” CohhCarnage said, and with three million subscribers, he knows that companies see the value of using his platform for promotion.

Twitch has created a new career track for casual video gamers, helping thousands make a living by playing video games.

There are two paths this can take. Twitch streamers are either crazy good— the nerd equivalent of pro-footballers — or they’re entertainers, their broadcasts a hybrid radio show, comedy hour and video-game commentary.

The best gamers make bank.

Saahil “UNIVeRsE” Arora, a 25-year-old American videogamer is the world’s highest-paid professional videogamer, a.k.a eSports champion. In August he won $1,964,038 at The International Dota 2 tournament in Seattle.

He’s not alone.

At least ten more players made more than a million each by playing Dota 2, according to e-Sports Earnings.

Saahil Arora in action. Photo via ESL

But most professional Twitch streamers aren’t millionaires. But they do make good money.

Twitch said they’ve offered around 12,000 broadcasters a “subscribe button,” which lets fans support them with monthly five dollar subscriptions.

“For this generation, streamers are more like movie actors.”

I had TwitchCon attendee Taylor Sowinski explain to me why Twitch streamers are so popular.

“When you spend so much time hanging out with that person in a Twitch stream, you want to meet them. Being popular is about being a person who can crack a joke.”

Sowinski was in line to meet Twitch broadcaster PhantomLOrd, a streamer with over 1.1 million subscribers. PhantomLOrd auctioned his used Logitech g930 headset for $97,669 in 2014. Its retail value is under $100. Suffice to say, PhantomLOrd probably doesn’t need a 401k.


A breakdown of how Twitch streamers make money

Subscriptions

Fans pay $5 a month to subscribe to feeds they watch regularly (the feeds are free, BTW).

Twitch fans pay partly to support the streamer, but also to get benefits which include virtual badges, custom emoticons and chat room privileges.

“Think of every subscriber as an investor,” Andrew Winans of GameWisp told gaming pros and hopefuls at Twitchcon. GameWisp helps streamers and YouTubers monetize their audience with targeted promotions.

Donations

Surprisingly this is where Twitch broadcasters make most of their money, according to Winans and every Twitch.tv streamer I spoke to.

This is an economic anomaly.

The only professionals I know who live on donations are servers, priests and beggars.

In those cases there’s a ton of social pressure to voluntarily give something even though there’s no penalty for not doing so.

When that basket gets passed around on Sunday, you know the lady in the fancy hat is gonna evil eye you if you don’t throw a dollar in. Same with the guy begging for change, I just feel bad if I walk by without making a guilty excuse about not having change.

But no one knows if you don’t donate on the internet.

Enter the miracle of positive reinforcement. This is why Twitch streamers are such badass fundraisers.

In 2013, Twitch broadcasters raised over $8 million dollars for Children’s Miracle Network Hospitals. Fundraising is second nature for streamers.

Cashing in with commercials

“Twitch is a whole new world, especially for advertisers. We can offer a much larger gamut than just posting something. We can have our mods (channel moderators) talk about it, we can talk about it, we can post an advertisement,” CohhCarnage said.

“There is no normal. There is no going rate.”

The advertising on Twitch channels can be static or three minute videos.

Making it with merchandise

Every Twitch partner who has “made it,” enough to have paying subscribers can sell branded T-shirts.Twitch encourages broadcasters to make merchandise by building Teespring, ( a platform where they can design and sell items) into the dashboard of their personal Twitch page.

If you’re popular you sell a lot of T-shirts.

Take Twitch broadcaster Lirik. He has 1.1 million followers. His latest $23 “cat in a helmet” Tee had 6,681 sales. That’s $153,663 in gross sales. This is his third Teespring campaign.

Teespring said broadcasters make $12-$18 a tee from sales. They’ve launched 1400 Twitch campaigns since 2012.

Sponsorship

When gaming or gaming product companies like a streamer, they’ll give them free gear or money for using their product. It’s hard to place an exact value on this, but good quality headphones, microphones and speakers aren’t cheap.


Twitch and the global economy

Twitch couldn’t exist without streamers, but its spawned an industry that goes way beyond them.

Twitch Talent Agents

David Goldberg, of New York and Hong Kong-based agency Flood Gaming said that Amazon buying Twitch made him realize there was real money to be made here. He believed Flood Gaming was ideally placed to broker deals between Twitch stars and corporate brands.

“We are the agents for gamers who do this for a living,” Goldberg said. “There was no one offering professional representation for gamers. A lot of them were signing deals without representation, entering into arrangements with brands that were not commensurate with the following they have.”

Flood Gaming was formed in March. Goldberg wouldn’t talk too many specifics — his agency is only a few months old — but he did say that the agency set up a collaboration between the Twitch and YouTube star Hafu and JellyBelly.

The new “entourage”

Twitch Managers

“You wouldn’t expect Tom Cruise to negotiate his own contract,” said Omeed Dariani, founder of the Online Performers Management Group. “When you get to this level you might want someone to help you.”

Dariani – who represents CohhCarnage – doesn’t charge a fee, but takes a cut of deals his clients get. He said some agents take higher cuts, ranging from 10-50%.

Tax Accountants and Attorneys

Most Twitch broadcasters have NO IDEA how to do their taxes.
And neither do most tax accountants or attorneys

“Taxes are one of the most mystifying things. We’ve been trying to figure [them] out for years now,” broadcaster Ellohime said. They’re hard enough for “normal” people.

Problem is, the IRS doesn’t realize a full time broadcasting video game star as a profession. Broadcasters don’t know how to report their earnings.

“It’s murky,” CohhCarnage said. “Experienced people who’ve been doing (taxes) for years have no idea what to do with us. One guy said he would file my taxes as if I were an actor.”

When the panel about finding the right manager finished, I watched one of the audience members go up to the panelists. He was a tax accountant. He offered to help the stars file their taxes correctly. They looked interested.

That’s the thing about the Wild West of streaming. It’s all there for the taking.



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