How Twitch & the Atlanta Falcons earn more by charging less
Lower prices can mean a bigger bottom line earned from other revenue streams
Twitch is one of the most underrated social platforms today. Bought by Amazon in 2014 for just shy of $1Billy, it started as a place to watch others play video games but has grown into much more.
The Atlanta Falcons have a history of great games but falling short when it matters most. Owned by Arthur Blank who also owns Atlanta United, both organizations understand that fans care about the in-game experience just as much as the on-field performance.
This week Twitch announced that in some of their markets, they will be dropping the standard $5/month subscription cost in an effort to encourage viewers to financially support creators and retain viewers.
In a similar move, the Falcons have consistently dropped prices on food & beverages to encourage people to come into the game sooner. After their first season, this resulted in a 65% increase in point of sale transactions and an 88% increase in merchandise sales accoring to ESPN's Darren Rovell.
At one point, Blank’s executive team even suggested to raise prices by slightly but he instead came back asking to drop prices. The team feels it was a way to drive home their commitment to creating the best in-game experience for fans.
Twitch’s bet is to keep viewers and earn more for creators
The move to reduce pricing for the lower-tier subscription is to keep interest from viewers in growing nations, but also hopes to have a similar affect as the Falcons price reduction.
More viewers means more money in the creator’s pocket.
People who have an audience on Twitch make money in a few different ways:
Get a cut from video ads
Earn on in-app buys from viewers that get the creator to recognize your existence
Create brand partnerships aligned to their niche just like any other sport
Sell items that all celebritites earn from like merchandise, affiliate links for Twitch products, and speaking engagements
By reducing the price, there will be more people to watch ads and a higher likelihood to purchase all the addtional items a creator earns from.
Active users in Europe or Asia that support creators is half of what people spend in North America and 80 percent less than people spend in Latin America. Lower subscription prices can change that, according to Twitch.
So just like someone being more inclined to buy an extra beer at a football game or grab a player’s jersey, Twitch watchers (Twitchers?) will be more open to support a streamer by paying for a shout-out or buying some sick gamer swag.
Now full circle, Amazon has rights to every Thursday Night Football game so look for the Falcons against the Patriots later this year on Twitch and try not to get sucked into too many ads.