How Much Money Could Twitch's New Feature Bring In

TNL Take: In June of 2016, Twitch introduced bits and cheering and provided another means of monetization for streamers outside of subscriptions. In the simplest terms, viewers purchase bits (the lowest price is $1.40 for 100 bits) and then give them to streamers in the form of cheering.

Twitch Bits (Photo: Twitch)

Twitch Bits (Photo: Twitch)

I thought the feature was amazing however it lacked 1 key element: Brands. My idea was this:

  • Custom Bits for Brands
  • Let Streamers/Brands give them away to their audience for Free
  • Audience donates the Brand Bits in the exact same manner and the streamer gets paid on the same revenue share of $0.01 cent per Bit — but charge a 0% Fee — as Twitch will already monetize on the Ad side

While that wasn't implemented, you can watch a Video Ad to earn bits instead of paying - more on that later.  

Last week, Twitch unveiled a new integration for viewers to use Bits and Cheers to support their favorite teams in Overwatch League.

Overwatch Hero Emotes (Photo: Twitch)

Overwatch Hero Emotes (Photo: Twitch)

Here's the interesting part: the revenue generated won't be shared with the teams but goes directly to Twitch and Overwatch League.

How did Week 1 fare?

Total Overwatch League Cheers (Photo: Twitch)

Total Overwatch League Cheers (Photo: Twitch)

Over 21M+ Cheers were contributed by the community which also has an overall goal total to unlock more goodies for Overwatch fans. With a few assumptions, here's how much was generated:

  • At the cheapest conversation rate of 100 bits for $1.40, the total haul would be ~$300,000
  • Lower the weekly run rate to $250,000 to be conservative
  • $1M potential revenue each month

While that maybe a drop in the bucket; all the drops will be necessary to recoup the estimated $90M that Twitch paid for media rights.

I still believe that Brands can be integrated into this ecosystem outside of Watch-to-Earn videos and hopefully will be coming soon.

Further, Twitch continues to evolve from merely lean-back, passive viewing to more engaging and community driven features. 

EA Madden, NFL, Amazon, Mobile and eSports

EA MADDEN, NFL, AMAZON, MOBILE AND ESPORTS

EA Madden, NFL, Amazon, Mobile and eSports (Graphic: The Next Level)

EA Madden, NFL, Amazon, Mobile and eSports (Graphic: The Next Level)

EA Madden NFL Year over Year Comparison (Infographic: The Next Level)

EA Madden NFL Year over Year Comparison (Infographic: The Next Level)

This is one of three big changes to EA's Club Series with NFL pro teams. While last year started with 8 - Bills, Jaguars, Chiefs, Vikings, Patriots, Eagles, Steelers and the 49ers - this year, it expands to all 32 NFL teams.

 

/02 PRIZE POOL

EA 2017 Club Series Champion Prize (Photo: EA Sports)

EA 2017 Club Series Champion Prize (Photo: EA Sports)

The second big change is the amount of money on the line. Last year's 8 total events were for $10K each along with the Club Finals with a $50K prize pool, bringing 2017's total to ~$130K.

Madden 18's Club Championship total prize pool of $400K+ more than triples last year's total...with a catch.

 

/03 STRUCTURE

In addition to the Club Series Finals being held at Pro Bowl Experience in Orlando, the winner will also receive 2 tickets to Super Bowl LII - another sign of the NFL's involvement.

 

 

/04 TWITCH PRIME

Now is where things start to get really fun.

This past Saturday morning  I found something very interesting posted and tweeted the following:

EA Madden NFL 18 and Twitch Prime Integration (Photo: LinkedIn)

EA Madden NFL 18 and Twitch Prime Integration (Photo: LinkedIn)

The reception from the community was overwhelmingly positive and a YouTube video made just around my Tweet has 20,000+ views currently:

Mr.GoldenMut YouTube Video (Photo: YouTube)

Mr.GoldenMut YouTube Video (Photo: YouTube)

Twitch Prime and EA Madden NFL 18 Promotion (Photo: Twitch)

Twitch Prime and EA Madden NFL 18 Promotion (Photo: Twitch)

I've talked plenty about how Twitch Prime is genius and the ability to lure in publishers is so critical and this is another example.

 

/05 AMAZON'S NFL PROGRAMMING

The Patriots Winning Another Super Bowl (Photo: USA Today. Mark J. Rebilas)

The Patriots Winning Another Super Bowl (Photo: USA Today. Mark J. Rebilas)

In April, Twitch owner Amazon signed a partnership with the NFL for $50M to stream 10 Thursday night games to Amazon Prime members.

Everything is about selling Amazon Prime. Everything is about selling Amazon Prime. Everything is about selling Amazon Prime.

If 500K people sign up for Amazon Prime to get access to the NFL content, Amazon breaks even on the media rights. Even if they don't, it's more marketing and programming for their content chest.

 

/06 MADDEN MOBILE

EA Madden NFL Mobile (Photo: EA Sports)

EA Madden NFL Mobile (Photo: EA Sports)

One of the least publicized success stories in the mobile gaming space is Madden Mobile. During the NFL season the game is consistently in the Top 10 grossing on the App Store.

Go ahead and check where it is right now.

Amazon has invested greatly with Vainglory and mobile eSports and there's further opportunity here as well.

 

/07 TICKETING

I covered this last week with Amazon's potential disruption of another industry - ticketing - and the huge eSports opportunity that it holds.

Now add NFL ticket purchases and all the additional value provided with the points above.

 

/08 NFL INVOLVEMENT

Don't discount the NFL finally getting into eSports and putting their name, marketing and executives behind this initiative.

The NFL is the 800-pound gorilla on top of the media and sports food chain.

 

THE REAL DEAL

 

It's great to see the largest and most popular US sports league jump into the eSports pool.

Now add in cross promotion between EA Madden, watching Thursday NFL games on Amazon, Twitch Prime integration, Mobile, the NFL's marketing machine and the vision starts to emerge.

 

But here's the reality.

 

/01 It’s nowhere close to what Activision-Blizzard is building with their Overwatch League, Riot Games’ North American League of Legends League or the upcoming NBA 2K ELEAGUE with more than half of the pro teams included.

For both the NFL and EA to emulate OWL, LOL, and NBA2KELEAGUE in such a short amount of time would have been a herculean task.  The information for the Madden 18 competitive season was released less than a week before the game launches.

 

/02 The total EA Madden NFL 18 prize pool increased from $1.000M to just $1.153M. EA should clear $750M+ in Ultimate Team earnings from primarily FIFA and Madden this year with continued growth.

Even the Club Series total while seeming high at $400K is the total for 32 teams - when looked at on an individual basis it's also a slight increase over last years $10K prize pool each.

A slight prize pool increase and fewer Athletes being flown out to events - while Ultimate Team dollars continue to flow in.

 

/03 No details were revealed around either Digital or TV distribution but I'd be shocked if the Madden 18 Championships were not either on a Disney platform or The NFL Network.

 

04/ Brands - where are they?

While last years Club Series did have brands present like Gillette and the Patriots, these deals were either added value or for very little revenue.

 

/05 This is the biggest difference between the 3 major upcoming eSports leagues and what European soccer teams are doing with their investment.

While the winners get a much larger prize pool, entry to the Madden 18 Championships and a slew of benefits, what happens with “NFL Club Winner” after this?

This program isn’t like being officially sponsored by a Paris St. Germain, which has many FIFA Athletes represent the club and provide the “3 M’s Of Why Pro Sports Teams Invest In eSports”™ - Marketing, Merchandising and Monetization.

 

Whichever NFL pro team does decide to become the innovator and begin emulating their European counterparts will start seeing the ROI with real investment in the eSports space much  more quickly than the next teams that will quickly follow suit.

China's Tencent Imposes Limits On Kid's Mobile Gaming

CHINA'S TENCENT IMPOSES LIMIT'S ON KID'S MOBILE GAMING

Talking Tencent On China Global Television Network (Photo: CGTN)

Talking Tencent On China Global Television Network (Photo: CGTN)

TNL Take: I'm absolutely fascinated by Tencent.

They're the world's largest gaming company and dominate eSports.

Tencent's eSports Domination (Graphic: The Next Level)

Tencent's eSports Domination (Graphic: The Next Level)

They acquired the largest independent mobile gaming company Supercell at a whopping $10B valuation.

Tencent and Supercell (Photo: Tencent)

Tencent and Supercell (Photo: Tencent)

As Chinese and US legal laws are vastly different to put it mildly, it was very interesting to see Tencent take action themselves and limit kids mobile gaming time on their massive hit "Honour of Kings".

Before we get to the restrictions some quick stats on how big this game is:

  • Monthly users are estimated between 160M -200M
  • 2017 revenue is estimated between $1B - $1.5B
  • Tencent is looking at building a theme park around this game alone

These restrictions came from parents complaining about their kids "addiction" to the game and teachers annoyed by the distraction in schools - aka the Chinese fidget spinner.  Tencent's restrictions are pretty amazing for a Chinese company that's not required to do this:

  • Kids under 12 can only play for 1 hour and not after 9pm
  • Those between 12-18 can play for 2 hours

How does this game compare to the US? How does this affect Tencent's financials? Will other Chinese companies follow suit? Are there US examples of similar restrictions?

I chatted with Rachelle Akuffo with Chinese Global Television Network's on their "Global Business America" show to discuss this further.

eSports Week In Review | eSports Youngest Sports TV Viewer, PWC's Real Research, Pro Hockey Invests

ESPORTS WEEK IN REVIEW | ESPORTS IS YOUNGEST SPORTS TV VIEWER, PWC'S REAL RESEARCH, PRO HOCKEY INVESTS

Twitch eSports Arena Presented By T-Mobile (Photo: Twitch)

Twitch eSports Arena Presented By T-Mobile (Photo: Twitch)

TNL Take: This biggest gaming conference in the US - E3 - revealed a ton of eSports related news and brand deals which will be looked at deeper.

This week, the next The Next Level was revealed, PWC released a realistic eSports revenue report, Pro Hockey investment increases, and as the sports tv viewer ages, eSports remains the youngest.

 

MONDAY 06/12

The Next The Next Level

The Next Level (Graphic: Jordan Fragen)

The Next Level (Graphic: Jordan Fragen)

PWC's 2017 Global Entertainment and Media Outlook (Photo: PWC)

PWC's 2017 Global Entertainment and Media Outlook (Photo: PWC)

EA Sports NHL 94 aka The Best Hockey Game Ever Made™ (Photo: Racketboy)

EA Sports NHL 94 aka The Best Hockey Game Ever Made™ (Photo: Racketboy)

TNL Infographic 046: Sports vs. eSports Viewership Ages (Source: Magna Global/Sports Business Journal/Nielsen Infographic: Jordan Fragen)

TNL Infographic 046: Sports vs. eSports Viewership Ages (Source: Magna Global/Sports Business Journal/Nielsen Infographic: Jordan Fragen)

 

Have a great weekend!