Livestreaming has become a cultural force in the video game business, and that explains why streaming leader Twitch is announcing today that it has raised $20 million in a third round of funding. The investors include Take-Two Interactive, the publisher of big hit Grand Theft Auto V.
Microsoft and Sony are building Twitch into their next-generation consoles.
San Francisco-based Twitch now counts 45 million monthly unique viewers for its streams, which show videos of players’ sessions in real-time over the Internet. The service has enabled the pastime of game spectating, and in turn, that has helped build huge audiences for professional gaming tournaments, also known as eSports.
People can consume video, such as live tournaments where millions of dollars in prizes are at stake. They can also broadcast their own play for anybody to watch. Content creators can set up their own video channels and make money from ads.
The money comes from Thrive Capital, WestSummit Capital, and the aforementioned Take-Two. Existing investors Alsop Louie Partners and Bessemer Venture Partners joined the round. Kevin Lin, chief operating officer at Twitch, said in an interview with GamesBeat that the firm will use the money to scale its internal sales division and build its infrastructure. That infrastructure supports hundreds of thousands of concurrent (simultaneous) users.
Like other forms of livestreaming, Twitch’s gaming broadcasts require a lot of Internet bandwidth. The company has 15 data centers around the globe to deliver billions of streams per month. The average watcher takes in more than a hundred minutes a day.
Twitch started in 2007 as the gaming component of Justin.tv. The Twitch spinoff officially launched in June 2011, allowing players, publishers, developers, and media companies to broadcast their own live video and then archive the footage as shows. Since that time, industry leaders like Activision Blizzard have built livestreaming into titles like Call of Duty: Black Ops II. Microsoft and Sony are integrating Twitch into their next-generation consoles.
“Twitch is a company that we see riding multiple waves both in gaming and online video,” said Chris Paik, Partner at Thrive Capital. “By providing gamers a new way to express themselves, Twitch has built a strong, passionate, and fast-growing community around itself.”
Over time, Twitch has improved its video quality. But it has had to balance that growth with its ability to make money. Besides ads, the service also has a subscription program that is very important to overall revenue, said Matt DiPietro, vice president of marketing and communications at Twitch, in an interview.
“We continue to invest in our subscription products,” he said.
“We see many exciting opportunities for Twitch to build upon their global leadership position in this explosive sector of the industry, especially in the innovative and rapidly growing Asia Pacific region,” said Raymond Yang, managing director at WestSummit Capital. “We are delighted to partner with Twitch as the company enters its next phase of growth.”
Twitch will use funds to expand its Twitch Media Group, an internal ad sales force. It will also upgrade its infrastructure to deal with the streaming capabilities of the PlayStation 4 and Xbox One.
“Given the excitement surrounding Microsoft and Sony’s upcoming video game consoles, Twitch will be in a lot of living rooms this holiday season,” said Lin. “Their intuitive and accessible integration of Twitch removes the barriers to entry which casual broadcasters currently face, so we expect traffic numbers to soar when these consoles launch. The trend of video game based content as entertainment is not only here to stay, it’s becoming a critical part of the holistic gaming experience.”
To date, Twitch has raised $42 million. It has 90 employees and is hiring. One rival shut down earlier this year, so Twitch doesn’t have a streaming competitor in the gaming space at the moment, except for game companies that broadcast their own live video.
“Our differentiator is that we were built to be a video game experience,” DiPietro said.