We have recently been debating whether or not game developers should be paid by streamers and streaming websites who make money by showing videos of said streamers playing their game.
First of all, some figures: during the coronavirus lockdown, more than 2 billion hours of video games streams were consumed on Twitch alone (Source). If one includes all other streaming sites (YouTube for example has been rapidly growing its share of this market) then you can probably double that figure (Source). In 2018 YouTube estimated that people watched 60 billion hours of gaming on its site (Source).
So, is it fair that streamers and the sites that host them are monetising this opportunity and not paying for the privilege?
Analogies can be made to the music or film industries where this would never be allowed to happen. We would argue that it is somewhat different because the marketing benefit of having a streamer play your game is so much greater than having a song played. In the case of a film, most people will only watch a film once, so that is not really comparable in our opinion.
As an equity and project finance investor in the gaming sector we speak to lots of developers. On this subject the general view is that they would not want to do anything to dissuade streamers from playing their game as every viewer is a potential or actual owner of that game. Having a gamer's favourite streamer play that game is ideal marketing and that translates into sales which translates into profits. Aside from not wanting to look like the big nasty corporate shutting down an independent streamer, the relationship is clearly symbiotic and a commercially sensible arrangement.
For the largest games, however, we do think that there may eventually be a fee charged by the producers of those games, particularly where the streamer's popularity is mostly or entirely due to a particular game (eg Shroud in PUBG; Ninja in Fortnite; TheViper in our game of choice, Age of Empires). This is one reason why we feel that the multiples being paid for the likes of Activision Blizzard and Take2 are somewhat justified (42x earnings at today's prices). There are so many revenue sources which are currently not exercised by those companies (for example, why is in-game advertising not more widespread) and as the streaming/esports/advertising markets in gaming become more developed, they can gradually be monetised more effectively.
Video Game streaming - Beneficial to developers?
