Does Twitch Lose Money With Turbo?

The short answer is: no, Twitch does not inherently lose money with Turbo. While it’s true that Turbo subscribers experience an ad-free viewing experience, and thus do not generate direct ad revenue for Twitch, the platform has structured the program in a way that ensures it remains profitable. Turbo is a paid subscription, and the revenue it generates is intended to offset the lack of ad revenue and contribute to Twitch’s overall financial health. The income from Turbo is part of Twitch’s diverse revenue streams that, when combined, contribute to their overall profit. Instead of losing money, Turbo is designed as a premium service to attract a subset of viewers willing to pay for enhanced features.

Understanding Twitch’s Revenue Model

To grasp why Turbo isn’t a financial drain, it’s important to understand how Twitch makes money. Primarily, Twitch’s revenue comes from three main avenues:

1. Advertising: This includes pre-roll, mid-roll, and banner ads shown on streams. It’s a substantial income source, but varies depending on the number of viewers, their demographics, and the deals Twitch strikes with advertisers.
2. Subscriptions: Twitch subscriptions come in tiers, starting with Tier 1 at $4.99 per month. These are split between Twitch and the streamer, with the standard split being 50/50 for most streamers. Higher tiers and special programs can change this ratio.
3. Bits: Viewers can purchase and use Bits, Twitch’s virtual currency, to cheer in chat and support streamers. Twitch takes a portion of these sales.

Turbo is a distinct service offering an ad-free viewing experience and other perks such as extended VOD storage and exclusive chat features. Importantly, Twitch does not rely solely on ad revenue for its profitability and has established Turbo as an alternative income source.

The Economics of Twitch Turbo

Twitch Turbo provides an ad-free experience for users. This means, those who subscribe are not shown advertisements when viewing. Although this initially appears like a lost revenue stream, Twitch has several mechanisms in place to mitigate this. The most important factor is that Twitch Turbo is a paid subscription model.

• Subscription Fees: The monthly fee for Twitch Turbo is $11.99 in the US, although it varies globally. This fee is a direct source of revenue for Twitch and helps to offset the potential loss from ad impressions. Furthermore, although Twitch Partners and Affiliates do not make money from ads watched by Turbo subscribers on their streams, they still receive revenue from these Turbo subscriptions. This ensures content creators benefit from the Turbo revenue ecosystem.
• Upselling and Premiumization: Turbo serves as a premium offering that encourages some users to spend more for an enhanced Twitch experience. This model caters to dedicated viewers willing to pay for convenience. By creating this tiered system, Twitch can tap into different user demographics and monetize its platform more effectively.
• Data and Analytics: Even though Turbo users don’t see ads, Twitch can still collect valuable data about their viewing habits, which can be used to inform future platform improvements, targeting, and strategy.

Turbo vs. Other Revenue Streams

The success of Twitch’s business model is the fact that it does not rely solely on a single stream of revenue. By diversifying their earning potential, Twitch can leverage different types of user engagement.

• Subscriptions: Standard channel subscriptions remain a major revenue driver, with creators and Twitch splitting the fees. Turbo subscriptions complement this, providing an alternative.
• Bits: Bit purchases offer another way for viewers to directly support streamers, and Twitch takes a cut of these transactions as well.
• Prime Gaming: Twitch Prime, a bundled service with Amazon Prime, also generates revenue. Twitch offers a free channel subscription each month for Twitch Prime subscribers. The channel then receives subscription revenue for this.
• Sponsorships and Brand Partnerships: These are usually separate deals between Twitch and various brands, and provide additional revenue to Twitch.

The Price Hike and Its Implications

Recently, Twitch has increased the price of Turbo. For example, the price increased from $8.99 to $11.99 in the US, and a similar increase occurred in the UK, with the price jumping from £7.30 to £12 per month. This price adjustment reflects Twitch’s attempts to balance the costs of running the platform and providing value to its users, along with its efforts to support creators worldwide.

The increase in Turbo prices does not necessarily correlate to increased cost to run the platform in regards to Turbo subscribers specifically, but instead is part of a broader strategy to maximize revenue potential. This strategic decision could stem from a combination of factors, such as the need to fund creator programs or further improve its infrastructure. The fact is that, it is another method Twitch uses to ensure profitability and grow.

Turbo is a Strategic Service, Not a Loss Leader

It is critical to understand that Twitch Turbo is designed to cater to a specific user base willing to pay for enhanced features. It is not a product that detracts from profits, but it is meant to add to them. Despite the lack of direct ad revenue from Turbo users, the revenue from Turbo subscriptions, coupled with its role in Twitch’s larger ecosystem, ensures that it’s a profitable aspect of the platform’s business model. The increase in price globally is further evidence that the company is focused on ensuring a profitable balance of its products and services. In summary, Twitch does not lose money with Turbo, but instead uses it as a strategic premium service to diversify its revenue streams.

Frequently Asked Questions (FAQs)

1. What are the main benefits of subscribing to Twitch Turbo?

Twitch Turbo offers an ad-free viewing experience, exclusive emoticons, customizable chat colors, a Turbo chat badge, and extended VOD storage (60 days instead of 14).

2. How much does Twitch Turbo cost?

The cost of Twitch Turbo is $11.99 per month in the US, although prices may vary in different regions globally.

3. Do Twitch Partners and Affiliates earn revenue from Turbo subscribers?

Yes, Twitch Partners and Affiliates still earn revenue from Turbo subscribers who watch their channel, even though they are not generating ad revenue on those channels.

4. How much do Twitch streamers typically earn per subscription?

Typically, Twitch streamers earn 50% of the $4.99 monthly subscription fee for Tier 1 subscribers, with Twitch retaining the other 50%. However, this can vary based on specific partnership agreements.

5. What is the difference between Twitch Turbo and Twitch Prime?

Twitch Turbo provides an ad-free experience and enhanced chat features, while Twitch Prime (now Prime Gaming) provides a free channel subscription each month, free games, and in-game loot.

6. Why did Twitch increase the price of Turbo?

Twitch adjusted Turbo prices globally as part of its efforts to help creators build and grow their communities worldwide and as part of a larger strategy to increase profits.

7. How does Twitch make money?

Twitch makes money through advertising, subscriptions, Bits, Amazon Prime Gaming partnerships, and through various sponsorship deals.

8. What is the revenue split between Twitch and its streamers for subscriptions?

The standard revenue split for subscriptions is 50/50 between Twitch and the streamer, though some streamers have higher splits due to special programs.

9. Why are Twitch subscriptions more expensive on mobile apps?

Subscriptions on Android and iOS apps may cost more due to additional platform processing fees applied by the Google Play Store and Apple App Store, respectively.

10. Does Twitch take a 70% cut from certain streamers?

Yes, some channels can qualify for a program that pays 70% of net subscription revenue for 12 months, or longer if they continue to qualify for additional months, until they reach the $100,000 annual threshold.

11. How much can a Twitch streamer with 1000 average viewers make?

Streamers with 1000 average viewers can make around $5,000 per month, although this varies greatly based on sponsorships, donations, and other revenue sources.

12. What percentage of subscription revenue does Kick offer to its streamers?

Kick claims to offer an unprecedented 95-5 revenue split, which is a major attraction for streamers looking for a higher percentage of subscription revenue.

13. What happens if I need a refund on my Twitch Turbo subscription?

Twitch does not typically offer refunds for recurring subscriptions unless there are technical issues, fraud, or other special circumstances, and may be required to refund based on local laws.

14. How long are VODs stored with Twitch Turbo?

With Twitch Turbo, VODs are stored for 60 days instead of the standard 14 days.

15. Is Twitch Turbo beneficial to creators?

Yes, Twitch Turbo is beneficial to creators. Despite the fact that they may not receive ad revenue from Turbo subscribers, they will receive the revenue for Turbo subscriptions that watch their channel, and they have more viewers viewing their content without ads.