In the last few days an Adpocalypse has been declared for Twitch as prominent creators have reported declining revenue. Numerous reporters have pointed to changes in the Content Classification Label system and a reduction in the available ad spend as indicators that Twitch is currently undergoing a crisis.
Dubbed Twitch’s Adpocalypse, the crisis has been compared to the 2017 Youtube Adpocalypse. That crisis that saw hysteria over ads being served next to sensitive content causing advertisers to pull out of the platform. YouTubers saw a drop in ad revenue of up to 80%, causing many to retire or switch to a Patreon-like model moving forward.
The Twitch Adpocalypse Begins
Image Credit: Twitch
In comparison to the Youtube Adpocalypse, Twitch now faces a similar crisis, albeit with more significant ramifications, as top Twitch Streamers face massive falls in ad revenue. Earlier this month, Twitch unveiled its improved Content Classification Labels, adding a new content category, focused on political and debated issues. This is likely due to the company facing scrutiny from advertisers over their products being displayed alongside politically extreme or controversial topics.
This is more significant for Twitch for several reasons:
- It has limited reporting systems on its ads, making it difficult for advertisers to gauge returns
- It lacks significant ways to target advertisements
- Twitch is often only a tiny part of a company’s ad spend, when compared to more reliable and tested ad spends such as television, web page advertisements, or even YouTube.
With this reduction in ad spend, there’s simply less money available to pay successful streamers, and as a result, their advertising revenue is falling rapidly.
What’s Causing The Twitch Adpocalypse?
Image Credit: Twitch
Within the recent reports, the reasoning behind the declining ad spend has been somewhat limited apart from ‘controversial content.’ Initially, there was only some indication that the issues came from Twitch’s lack of content standards and protections, but nothing exact. While reporter Devin Nash pointed to the fact that Twitch’s ad spend will always fall into the ‘experimental’ portion of any company’s ad spend, the exact reason why even those willing to experiment are leaving was unilluminated.
That was until prominent esports journalist Richard Lewis’ report on Monday morning that showcased that almost a dozen partners had left Twitch over Anti-Semitism allegations. One significant example given was Chevron, who reportedly pulled their ad spend over a viral clip that rated content creators from “Arab” to “Loves Sabra” which featured their logo prominently.
Beyond this, there’s a general perception that Twitch has an ‘adult content’ problem, with the prominence of ‘hot tub streamers’ and other mature content creating the image that this is not a family friendly environment. That in turn limits potential advertisers.
So It’s Over For Twitch?
Image Credit: Twitch
Is it over for Twitch then? Maybe, but not immediately. Twitch acted this month to expand its Content Classification Label system (CCL) which will see ads prevented from showing up alongside political and socially sensitive content and streamers.
The company also has some other options, but none are cheap or quick. The first and most obvious would be to better expand its ad platform, in the way YouTube and other sites do – giving demographics and improving targeting. It’s been noted that Twitch has limited potential for targeted ads.
Another would be to up its Video On Demand (VOD) capacity, offering shorter videos, or even just vertical aspect ratio ‘shorts’ like every other platform does. That way it could expand its audience and potentially its ad space.
But perhaps most likely, Twitch will fail to adapt. The platform will reduce in quality, likely drop some of its more popular elements, such as Twitch Prime subs, and perhaps even CEO Dan Clancy will be on the chopping block.
Overall, the adpocalypse could spell and end Twitch’s dominance over streaming and the rise of other streaming platforms. The alternatives? Kick, which has its own set of problems, and still (like Twitch) uses Amazon’s streaming services, or YouTube, who have a more restrictive set of guidelines.