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[REPORT] Just 16% Of Games Profit From Sponsored Twitch Streams, New Research Shows

In an April study titled “The Promotional Effects of Live Streams by Twitch Influencers,” researchers Yufeng Huang and Ilya Morozov from the University of Rochester and Northwestern University, respectively, unveiled findings that challenge conventional wisdom about the effectiveness of influencer marketing on Twitch, the world’s largest video game streaming platform. 

The research analyzes novel high-frequency data collected by continuously monitoring 60,000 popular Twitch streamers every 10 minutes over an eight-month period in 2021. By leveraging plausibly exogenous within-day variation in streamers’ broadcast hours, the researchers estimate the causal effect of live streaming on the popularity of broadcasted games.

A key finding reveals that despite the widespread enthusiasm for this marketing tactic, sponsored live streams generate positive returns on investment (ROI) for only about one-sixth of video games.

On average, the study finds that when twice as many people watch a game on Twitch in a given hour, the concurrent number of players for that game increases by 2.7%. However, this effect dissipates rapidly, dropping by 30% every subsequent hour and fading to just 10% of its initial magnitude within about seven hours.

Moving beyond the average effect, the researchers uncover substantial heterogeneity in how live streaming impacts different types of games. Live streams prove particularly effective for promoting games released by lesser-known publishers with modest marketing budgets. The study also finds larger viewership boosts for highly rated games and niche titles with polarized consumer ratings, suggesting live streams excel at showcasing a game’s quality and niche appeal.

To assess the profitability implications, the researchers conducted back-of-the-envelope calculations comparing the revenue lift from sponsored streams to a crude estimate of sponsorship costs. Their analysis indicates that the median return on investment from sponsored Twitch streams is a staggering -95%.

However, the distribution of outcomes is highly skewed, with 16% of games experiencing positive and high returns. These games disproportionately overlap with the categories that benefit most from live streaming: small publisher releases, highly rated titles, and niche games with polarized appeal.

“Our results paint a more complete picture than suggestive anecdotes claiming extraordinary ROI from influencer marketing,” the authors explained. “While sponsored streams can be effective for some games, they generate positive ROI for only about one-sixth of titles in our sample.”

The findings carry implications for video game publishers and marketing professionals. They underscore the importance of carefully selecting which games to promote via sponsored Twitch streams, as this tactic may only pay off for a narrow subset of releases. Conversely, the authors suggest incentivizing organic, unsolicited live streams could prove a more consistently effective strategy.

“Publishers should consider offering streamers in-game perks or making their games easy to broadcast organically,” Huang and Morozov advise. “Our study shows organic streams increase game usage about six times more than sponsored streams.” Read the full report here.

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David Adler is an entrepreneur and freelance blog post writer who enjoys writing about business, entrepreneurship, travel and the influencer marketing space.

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