How did Twitch grow into a global business?

by Craig Cochrane July 24, 2024

You might have heard of a popular live streaming service that caters to the video gaming world, but how did Twitch grow into the company it is today? Do you really know the story behind Twitch’s rise to the top?

In this article we take a look at the story behind Twitch and how its growth paved the way for founder Justin Kan to take a successful exit in a blockbuster $970m deal with Amazon.

Chapter 1 – Don’t be afraid to pivot

The foundation of Twitch lay in a service set up by Justin Kan in 2007 the premise of which was to live stream his life non-stop, imitating a big brother style reality show he called it Justin.tv. This initial concept grew in 2008 allowing anyone with an adequate setup to stream directly to the site and this is when the growth really accelerated, by the end of 2008 Justin.tv had accumulated 1 million registered users.

Justin.tv analytics indicated that the video gaming category eclipsed the other lifestyle content in terms of popularity. With this knowledge Justin Kan and Co-founder Emmett Shear created a spinoff to focus on the video gaming niche and they officially launched Twitch in 2011. The platform was an instant hit and by 2014 was a profitable business headquartered in San Francisco and employing over 100 people. With the success of Twitch Kan shut down Justin.tv in 2014 and doubled down efforts on growing Twitch further.

Chapter 2 – Venture Capital

Twitch has an early history embedded with smart use of venture capital in order to fuel rapid growth. In 2007 Justin.tv received $120k seed funding which fueled the development of its infrastructure and the promotion of its concept. Whilst in 2012 and 2013, Twitch with its growing user base was able to secure $15m and $20m in series B and C funding respectively. These injections of capital allowed Twitch to support a growing user base, invest in further advertisements and develop the initial concept to add more unique features over its competitors.

Chapter 3 – Revenue share

One of the key answers to How did Twitch Grow lies in its revenue share model. In the early stages Twitch’ primary revenue driver was advertising and they had a number of popular streamers driving traffic and thus revenue figures. As a result Twitch launched a partner program under which popular streamers could generate revenue through streaming, by doing so Twitch accomplished two things:

Popular streamers were incentivised to stay on Twitch and not migrate to a competitor
Popular streamers were incentivised to grow their viewership further in order to reap the benefit of higher reward

This also gave Twitch a rags to riches style feel and with streaming equipment becoming more and more accessible it opened the door for potentially anyone to start streaming and make it big.

Customers now saw an opportunity to share in the growth and with more streamers came more viewers which in turn drove more streamers looking to monetise one of their hobbies.

Now in 2023 and a subsidiary of Amazon Twitch continues to go from strength to strength. With a reported 7 million unique active streamers in 2023 and now considered the most common venue for esports competitions bringing in millions of viewers.

In 2023, reports suggested that Twitch would surpass $1 billion in advertising revenue, with top streamers projected to earn multi-million dollar sums annually.

How Did Twitch Grow? The key lessons

Twitch spanned from a related, but not identical product in Justin.tv. It was here that the live streaming of video gaming content emerged as a viable niche and with the visibility of user figures and a clear view of a potentially fruitful market the justin.tv team were able to pivot to capitalise with Twitch. Sometimes in business your first idea isn’t always the best and you need to be flexible to adapt to customer demand you may not have had sight of initially.
Venture capital played a big role in the development and marketing of Twitch. If you have a proven concept it can be a good idea to look for venture capital to accelerate growth and cement your market position
A revenue share model allows your customer base to share in the growth of your idea and this can often supercharge organic growth given your customers’ vested interest in growing their following which in turn grows yours!