Twitch- service innovation report

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Politecnico di Milano | Pssd Service Innovation

FIRST DELIVERY Service : Twitch TV Nation : United States Of America Year : 2011 - Acquisition by Amazon in 2014 Type of Service: Entertainment streaming platform Groups: Loris Cerrato, Nicolò Orlando, Sruthy Padannappurath, Ginevra Romagnoli

Academic Year 2017-2018


Describe the Service Map Of Offering

1.1 What Description of the service: service aim, Value Proposition, Diffusion

1.1.1

Twitch proposes as the leader entertainment platform for gamers. Its core consists in creating shows about the most famous video-games in the world, both online multiplayer and of ine single player, through a big number of content creators (streamers) and of cial professional tournaments or competitions. A complementary aim to that is to let spectators create community during the vision as if they were all attending the same show together; this is made through a live chat, that the stream page provides. Due to the kind of contents it proposes, the main users’ target is made by millennials, which are the

first generation in history who really grew up in a context where video-games (and especially competitive video-games) were a thing. To make just a quick example about the numbers this platform was able to generate, the last League of Legends world’s final, got a pick of over 1 million unique viewers. In the recent years other strong competitors have raised for twitch like youtube gaming, but the unique value proposition of Twitch is that, they plan to engage and keep their streamers by making it easier to monetize their streams through recently launched programs like Twitch affliate program. They also have options like Twitch extensions which make it easier to involve the viewers in games and work as a better community.

AutoMod tool Chat with streamer /spectator Cheering

Affiliation Program Subscribing system Vodcast

Custom badge/messages

Platform to Stream

Real time Chat

Chat moderators Automatic messages (bots)

Game buying codes and reward

Call/Video call Pulse Suggested contents Clip cutting

Platform to watch

Additional Services

Twitch Launcher Cloud for game progress saving


Describe the Service

1.2 How

Name Occupation Family Age

Description of how the service works: The user journey 1.2.1

The service works differently according to the kind of user that is utilizing it. If the user is a streamer, the platform provides a free channel to broadcast, an automatic system of video quality setting, a system to manage donations from spectators, an option to insert advertise in the stream (paying the streamer), a subscription counter for followers and many minor features. The most important and innovative feature the platform provides for streamers is the affiliation program, which is a system based on the numbers of viewers and subscribers that the streamer is able to generate, and on

that basis rewards him in different ways (mainly economically). If the user is a spectator, he is obviously able to watch the stream, has a live chat to communicate with other viewers and with the streamer itself, has some customization and “retention” options to interact with the stream page, a feed of suggested streams, many features about specific games with the desktop app, and finally a long list of benefits if he is subscribed to Amazon Prime (and then automatically to Twitch Prime), like no advertisements, additional emotes for chat, discounts on games, dedicated contents and many others.

Filippo Pugliatti Student Single 18

Discovery

Play A game online

Visit Twitch website for the first time

He wants to see how professional gamer play in order to learn how to do better and to enjoy the community.

“I really hope my favourite player will win today”

Start Discover watching The chat game option and streaming the huge on twitch community platform

“The Streamer” Riccardo Agostini Game Designer Engaged 27

Discovery

Search A Platform where share

Quote

Awareness

Sees the adv of an e-Sport competition broadcasted on Twicth

Name Occupation Family Age

Motivation

Find Out That Twitch is the Platform more used

Moment of truth

Review

Decide Become Discover Support Rates to buy a moderator Automod favourite the service twitch for his technology streamers of Twitch prime to favourite in chat donating on Amazon get streamer moderator bits as great benefits

Motivation

Quote

He wants to earn online sharing the thing the he knows better, play videogames.

“ Thanks to Twitch i finally combine a job with a passion”

Awareness

Visit Twitch website

Becomes an active user

Decide to strem his own content

Use

Start his own stream

Increase viewers

Earn

Moment of truth

Share

Receive Become Start Promote an email an earning his Twitch from twitch affiliate and Twitch channel on about became a social affiliation full-time media Program job

Costumer Journey Map

“The viewer”

Costumer Journey Map

Costumer Journey Map


Storyboard Viewer turned streamer




Business Model Canvas

Busisness model canvas Key partners

Customer segment

Popular/ well established streamers

Developing better interface Software development

Game developing Cos

Twitchcon convention

Key resources Streamers

Social live platform Streamers can make it a full time job easily

Twitch convention

Gamers

24/7 chat moderation

Game enthusiasts

Money transfer

Most effective chat moderation

Streamers Advertisement Cos

Channels Twitch platform

Softwares Hardwares and office Employees

Cost structure Software Innovation

Maintenance/ taxes Hardware

Revenue streams

Paying partners Paying affiliates

Advertisements Channel subsriptions

Game sales Twitch turbo/ prime subsriptions


Describe the Service System Map

1.3 Who Description of the main stakeholder 1.2.1

The main stakeholders involved in the service system are: spectators, streamers, advertisers and game developing companies. Spectators are the most important source of income in the system “net”: they sustain streamers directly through donations, subscriptions and indirectly by watching advertisements during streams, allowing the best of them to stream as a job, and so keeping creating contents for the platform. Streamers are what keeps the platform going, they are the main “offer” that the company provides to final users (spectators). Advertisers are mostly (but not exclusively)

companies involved in the gaming industry (informatics companies, hardware producers, game developers and so on), who find in Twitch a way more effective and fertile field for their spotlight, compared to traditional medias. Finally game developers are important stakeholders since they get paid with a considerable amount of money from Twitch by selling them the broadcasting rights of their eSports tournaments.

Streamer

Advertisement

Spectator Professional eSport Team

FLOWS TYPES

Information Flow

Game developer c Company

Financial Flow

Labour Performances


Analyse the service innovation

2.1 Level of newness Define the characteristic of the existing market/service and higlight how the chosen services differs. -New to the market -New to the firm 2.1.1

Twitch Tv was new to the global market of video game streaming by bringing in the live streaming idea 7 years ago. The main competitor for Twitch, Youtube Gaming, was started in 2015 and it now has almost all the basic features. To keep its competitive advantage Twitch has started the Affiliate program, which is a program that helps the streamers in monetizing their stream in a much more effective and stable way. This program provides mainly the possibility to get people subscribed to the streaming channel. The subscription is made with a 5/10/25 $

2.2 Degree of change fee, and these money are equally divided between Twitch and the streamer. Also Twitch is superior to Youtube gaming, with its better interactive experience during live streams due to its much advanced chat technology, which is the AutoMod tool: an algorithm able to block or flag inappropriate messages that can be viewed later by a human moderator. Unlike others Twitch also allows 24/7 chat support. As far as accessibility, Twitch stands out again by letting viewers watch and broadcast from consoles like Xbox One which Youtube is not able to do yet. (Game revolution, 2017) These innovations Twitch developed to keep their dominance in the streaming sector, are mostly things that were already well developed in other kinds of markets, but these are still not implemented on other platforms, making the innovations provided “new to the market”.make it easier to involve the viewers in games and work as a better community.

Define the characteristic of the original market/organization/dimension and articulate the depth of change ( how is totally new, addition or improvement?) -Radical Innovation -Incremental -Improvement 2.2.1

The market of gaming streaming has not changed much for a long period from its beginning and for some years on: Twitch was the absolute leader, they simply took the live broadcasting technology and focused it on a specific field of interest, growing till reaching global success; with the interest for the sector of eSports and competitive

gaming growing over and over, and with competitors starting to arise, the company had to evolve and make innovations. Right now there are a lot of other big companies in the live game streaming market and the changes Twitch has brought to the market are both incremental and improvement innovation. We consider the affiliation program as an incremental innovation, because even if consisting in basically only an improvement to the relation between the society and one of their stakeholders, it has a meaningful impact on the organization of the company, since it significantly changes their revenue streams. The AutoMod tool, instead, can only be considered as an improvement to the existing service Twitch already provided. It’s anyway important to underline the fact that this “upgrade” considerably affects the quality of the overall service, since it improves the chat, which is the main touchpoint between the service itself and its main users.


Competitors

Twitch

Youtube Gaming

Mixer

Comparison

PARTNERSHIP

Facebook Periscope

AFFILIATION

Montly Active Streamer 550 k

498 k

484 k

163 k

197 k

171 k 9,8 k 16k

8,6 k 15k

October

November

SMALL STREAMER 12 k 19 k

TWITCH GIVES THE OPPORTUNITY TO HAVE STRONG GROWTH IN SHORT TIMES EVEN IF THE STREAMER IS A BEGINNER

5k

PARTNERSHIP

December

Concurrent Viewer by Platform

736k 788k

281k

Q3

Q4

Q3

308k

Q4

3,3k

5k

Q3

Q4

33k 27k

Q3

Q4

41k

80k

Q3

Q4

Fonte:

report Streamlabs 2017

SMALL STREAMER

THE GROWTH ON YOUTUBE CAN STILL LEAD TO GOOD RESULTS, BUT IT IS MUCH HARDER TO GET VIEWERS AND FOLLOWERS IF STARTING FROM ZERO


Analyse the service innovation

Define which dimension are highly transformed and how 2.1.1

-Concept (typology,offer, business Model) -Client Interface (mode of interaction, touchpoints) -Service delivery system (organizational structure, processes, partners) -Technology The dimensions that got more affected due to the implementation of the new features we are focusing on, are the concept and the client interface. The affiliation program represented a very important change in the business model of the company and in the offer it provides, since it generated a totally new revenue stream (that is completely different from the ones the competitors are using).

This feature generates two different kinds of income, that otherwise would not be possible: first, it allows streamers to insert advertisement in their shows (they can’t if they are not affiliated); since the affiliated streamers are commonly the ones with the highest numbers of followers and viewers, Twitch is able to sell the spaces at higher prices over time, and is also able to share these revenues with the streamers, keeping them loyal to platform. Second, it allows streamers to get subscribers who, paying a fee at the moment of subscription, generate a stable income for the platform, that also in this case shares the money with the streamer. On the other side, the AutoMod tool, was an interesting change in the client interface; considering the chat, as we said before, as the main point of interaction between users and the platform, it’s important to keep it as enjoyable and “safe” as possible. Whoever is passionate about gaming knows that sometimes the community is not the best example of good behavior and the opportunity to contain this problem is surely an important evolution in a key dimension of the service.

Subscriptions

Advertisement

50% Twitch Prime/Turbo

Sale of Games

50%

50%

5%

50%

100%

User

Cheering/ Donation

More User Money exchange

Focus on innovation

2.3 Dimension of novelty


Analyse the service innovation

2.4 Pattern of Innovation Where does the innovation comes from and how? 2.4.1

-Supplier -Clients -Consultancy -Organisation -Paradigmatic change All the technologies Twitch is developing come from their internal teams. In particular they have one team called “Twitch Science Team” that works on deep data analysis and engineerical methodologies to do basically everything regarding the development in all the directions the company is following. Next to that, they are also making this team work with “social science” methods,

2.5 Means of innovation which are kind of comparable to the methodology we as PSS designers are used to (surveys, interviews, and similar kinds of analysis); Twitch Science was developed significantly after the company was acqired by Amazon in 2014. Besides that, we can say that the two main innovations Twitch brought to the market after that moment (Af liate pro- gram and AutoMod) are both client led innovations, since they are strongly based on the analysis of users’ needs. The meeting point between these two different kinds of approach, is “Twitch Developers”. Twitch Developers is a team dedicated to the interaction with the community and the analysis of the feedbacks; this team also has a specfic Twitch channel where they sometime stream and speak about the ideas and the projects the company is working on.

Indicate which kind of resources have been used to operationalise the innovation (mostly human or high-tech) you can add illustrative images. 2.5.1

-High-touch service( introduce new procedures, tranining,hiring,new roles etc -High-tech service (introduce new product, interface, new technology etc) For the nature of the service, that is strictly digital, it’s pretty much obvious that every innovation developed needs a certain component of “high-tech”. The operations on the chat are all based on artificial intelligence, which is developed from very specialized teams, with deep knowledge

about engineering and coding; the payment and donation management system for streamers all go through digital transitions and online banking, so even in this case, the technology part is not negligible. But, with that stated, is also very important to consider the fact that Twitch is a platform based on entertainment and entertainment always has a strong component of humanity and interaction between people. The interesting part about this point of view over the service is the fact that Twitch is basically building a business through interactions between persons, about a specific topic (videogames). As we specified many times, the main offer the company proposes consists in the streamers and in the community, so we can say that this is the high-touch component of the service. Besides that, the affiliate program makes even a streamer who has not reached the requirements for being a partner, monetize easily from their streams. This encourages more streamers to engage in the platform. Hence this service innovation changes the behavior of the users towards Twitch and can be considered hi-touch innovation.


Sources

Analyse the service innovation

2.6 Co-create of Value Who is benefiting from the innovation and how

2.6.1

-Provider -Client -Partners -Society The analysis of the value that Twitch generates from its activities needs to be seen from three different perspectives; the first one is the value for the client/user: Twitch is said to have 665 million viewers, according to SuperData in 2017 (John Ballard, 2017), who are very passionate about the service and are very interested in keeping using it, to receive the best level entertainment and quality gameplay. Since 2015, Twitch also conducts TwitchCon, which is a convention for Twitch users and it has been a huge success. These

3 Sources are evidences of Twitch creating value for the user. The second is the value for the firm: the insane numbers of successful channels that Twitch was able to promote and support through their innovations, allowed them to build a huge user base, that obviously turned into millions of dollars of income. The third one is the value for the partners: in Twitch, streamers are made partners and revenue is shared with them. This is probably the main factor that kept the whole system working at the best level, since many streamers are very proud to be part of its community, because it allowed them to create a job through their passion. Twitch also makes sure that also their “external” partners like for example Activision Blizzard or Riot Games, which are gaming companies, get monetary benefits by partnering with Twitch. Hence Twitch is creating value for the partners.

List of all sources used to create the case study (interviews, academic articles, reports, blogs, magazines, videos, websites, forums,observation, etc.)

3.1

Game revolution, 2017, http://www.gamerevolution.com/features/357779-twitch-vs-youtube-best-site-streaming Twitch Tv,2017, https://help.twitch.tv/customer/portal/articles/2662186-how-to-use-automod Twitch, 2017, https://af liate.twitch.tv/ pcgamer, 2016. https://www.pcgamer.com/twitchs-new-automod-tool-uses-machine-learning-to-create-less-toxic- chat/ John Ballard, 2017, https://www.fool.com/investing/2017/11/26/amazoncoms-twitch-is-dominating-the-game-stream- ing.aspx Twitchcon, 2018, https://www.twitchcon.com/ Inverse entertainment, 2016, https://www.inverse.com/article/21752-twitch-prime-twitchcon-explainer Mingli Zhang, Yu Wang, 2017, Why do audiences choose to keep watching on live video streaming platforms? An explanation of dual identification framework Qun Zhao, Chun-Der Chen, Ho-Wen Cheng, Jin-Long Wang, 2018, Determinants of live streamers’ continuance broadcasting intentions on Twitch: A self-determination theory perspective


Sources

David J, 2017, https://medium.com/precoil/what-is-the-business-modelfor-a-twitch-streamer-f3b9e5351666 Luke Butcher, Ysobel Tang, Ian Phau, 2016, Insights into perceptions of brand extensions of the video game industry Daniel R, 2017, towards a transcription and analysis of live streaming on Twitch Katherine Payne, Mark J. Keith, Ryan M. Schuetzler, Justin Scott Giboney, 2016, Examining the learning effects of live streaming video game instruction over Twitch Nathan Edge, 2017, Evolution of the Gaming Experience: Live Video Streaming and the Emergence of a New Web Community


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