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Waterhouse VC: Spinning into gear

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Tom Waterhouse, of Waterhouse VC, in his most recent column analyses the popularity and rise of gambling streamers. He charts the fall and success of Twitch, and its rival Kick.

Twitch has seen a rise in users due to the popularity of professional gamers. Amazon bought Twitch for $970m in 2014, only three years after the platform’s launch. The streaming industry is a huge opportunity, and only a few platforms dominate the US$3.8bn market.

The audience can join in on tutorials, social chats, and gameplay hosted by the gamers they love. Both streamers and audiences can use most platforms for free.

Platforms monetise audiences by monetizing advertising, premium subscription revenues and merchandise sales. Twitch offers three subscription tiers: $4.99 ($9.99) and $24.99 ($24.99).

Dividende de revenus de subscriptions

Twitch splits subscription revenues 50/50 with the streamer. The split was 50/50 until 2023, when it was changed to 70/30.

Twitch has its own currency, “Bits” which viewers can use to tip or support the streamer. Bits revenue is divided between streamers and platforms. The split is based on several factors such as popularity of the streamer and location.

Twitch changed the way it splits subscription revenues with its streamers for several reasons. The majority of streamers feel that their efforts are not being compensated.

According to a leak from 2021, only 0.01% streamers earn more than the minimum wage. Twitch’s revenue split was also influenced by the increasing competition of new platforms.

Kicking stream on the head

Launched in January 2023, Kick is rapidly gaining popularity among streamers as well as viewers. Platform offers streamers a very lucrative deal, allowing them to split the revenue 95/5 in their favor. The platform allows the streamers to retain all tips.

Kick is a platform that has embraced gambling, which makes it different from Twitch.

A Twitch streamer confessed in September 2022 that he borrowed money under false pretences from creators popular to fund gambling. Twitch banned most gambling streams due to this, and the negative impression of gambling streaming. The ban became operative on 18 October 2022.

The company stated: “We will be updating our policy on 18th October in order to prevent streaming of gambling websites that offer slots, dice, and roulette games, but are not licensed by the US, nor other jurisdictions which provide adequate consumer protection.”

Give people what they Want

Kick, on the other hand, has a lot of gambling-related content. It has been able to attract some of Twitch’s most popular streamers.

Trainwreckstv, for example switched over to Kick.com after Stake was barred from Twitch. In 2023, xQc signed a two-year US$70million deal with Kick.

Kick is clearly meeting a global need for gambling streaming. When gambling is banned, consumers often still find ways to play. This industry is resilient.

This is an emerging industry. As with any emerging industry, regulations are developing quickly.

Easygo Entertainment Pty Ltd is the “Australian powerhouse” behind Kick and Stake, two of the fastest-growing online brands in existence.

Easygo is the sole shareholder of Kick Streaming Pty Ltd, its registered legal entity. Easygo, a company founded in 2016, was created by Ed Craven & Bijan Tehrani.

A worthy competitor?

We can therefore be sure that Kick won’t ban streaming gambling. In several newsletters such as the May 2023, we have talked about Stake and its extraordinary growth in crypto betting.

Kick is attracting new streamers. The platform has grown from having 9,000 channels active in January, to over 67,000 channels active in April thanks to its 95/5 revenue split.

The platform’s monthly hours of viewing quadrupled in the same period from 12,8 million to 51,8 million. Annually, this translates to just 620 millions hours. This is only 2.8% the size of Twitch.

Kick, however, is a serious competitor to Twitch, thanks to its strong growth, and positive attitude toward gambling streaming.


Important Notes and Disclaimer


Note that the information above in regards to Kick Streaming and Easygo Entertainment platforms, Stake and Twitch as well as YouTube and Meta is based upon publicly available company information and shouldn’t be construed to be financial advice. This document contains general information and is not intended to be construed as investment advice or any other type of financial product recommendation. The reader should seek and follow professional advice on investment specific to his or her circumstances.


Only General Information


The material provided is only for informational purposes and does not constitute an offer to buy or sell any financial products or services. This material was prepared to provide information to investors that qualify under section 761G Corporations Act as wholesale clients or for any other individual who does not need to receive a disclosure document required by Corporations Act. This material does not provide financial or tax advise and it is not tailored to your needs, objectives or financial circumstances. We believe the information is accurate, but we do not guarantee its accuracy, completeness, or reliability, with the exception of statutory liability. Sandford Capital or Waterhouse VC, or anyone else, does not guarantee performance or a specific rate of return. Sandford Capital or Waterhouse VC, as well as any other party, do not assume any responsibility for the statements in this material.


Financial Regulatory Oversight and Administration


Waterhouse VC, an Australian Unit Trust in AUD is available for wholesale investors with a minimal investment of AUD 1,00,000. This can be converted to USD/EUR/GBP/JPY/CHF. The Trustee for the Waterhouse VC Fund, Waterhouse VC Pty Ltd, (ABN 48 645494861), has prepared this material. The Trustee, Sandford Capital Pty Limited is a corporate authorised rep (CAR 1296688) and a licensed AFS intermediary (AFSL 461811) under s911A(2)b) Corporations Act 2001(Cth).


Performance


Waterhouse VC’s past performance is not a reliable predictor of its future performance. Waterhouse VC Pty Ltd cannot guarantee that any particular strategy will perform or return an investor’s money or any rate of return. Taxation has not been taken into account, where appropriate. You should consider investing as an investment for the long term.


Copyright


Waterhouse VC Pty Ltd ACN: 635 494861 Copyright. Waterhouse VC has given permission for this message to be used in its entirety or part.


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