Twitch’s new payout system explained amidst ‘unfair’ controversy

On September 21, Twitch published a blog post detailing the revamped subscription income system for content creators on the purple platform. The new payout system will forego the 70/30 split that was previously offered to selected streamers.

The Amazon-owned livestreaming platform will soon implement the 50/50 split, and an updated Ads Incentive System will assist creators who have been impacted by the change.

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Twitch's new payout system explained

Dan Clancy, Twitch's president, addressed the platform's new payout system and explained the updated revenue share granted to various content creators.

The blog-post stated that Twitch uses a standard revenue split of 50/50, based on net revenue from the earnings. However, the corporation previously offered premium terms to selected streamers:

"For subscriptions, we use a baseline revenue share of 50/50 on the net revenue from those earnings. The vast majority of Twitch streamers have these terms in their agreement. However, for some time, we did offer standard agreements with premium subscription terms to select streamers as they grew larger."

Clancy disclosed that the platform lacked a consistent method for determining which streamers would receive premium incentives, therefore leading to the decision to discontinue offering such agreements to new content creators:

"This isn’t something we’ve talked about publicly, but such deals are common knowledge within the streamer community. Historically, we didn’t have a consistent framework to determine who would receive these deals and when. Over a year ago, we made the decision to begin to stop offering these premium agreements to new streamers not already on these terms."

Twitch will amend the contract for streamers who are still on the premium agreement in the revamped payout system, so that they can keep the 70/30 split for the first $100,000 generated through subscription revenue:

"For these streamers still on these premium deals, we’re adjusting the deal so that they retain their 70/30 revenue share split for the first $100K earned through subscription revenue."

All revenue above $100,000 will be split 50/50 from June 1, 2023:

"Revenue above $100K will be split at the standard 50/50 share split. We’re announcing this change now, but it won’t go into effect until after June 1, 2023. After that point, streamers will only be affected once their existing contract is up for renewal. All streamers with these terms have already received this information and more via email, and we will make sure to give them exact updates and timelines as we get closer to June 1, 2023."

Clancy stated that Twitch's recent increase in ad revenue share to 55% would be a "great way" for content creators to recoup any losses created by the new payout structure:

"For those who are affected, we wanted to make sure the impact was minimal — not just by giving them ample time before the deal goes into effect — but also by offering an alternative way to earn revenue. Our recent bump in ads revenue share to 55% as part of the Ads Incentive Program is a great way for these larger streamers to make up most, if not all, of that revenue."

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Twitch explains why the 70/30 split is going away

In a follow-up section, Dan Clancy explained why the 70/30 split was moving away from the platform.

The cost of operating a video-streaming service was a leading factor in the introduction of the new payout system. It was reported that Twitch spends more than $1,000 to host a streamer broadcasting 200-hour long streams per month:

"Delivering high definition, low latency, always available live video to nearly every corner of the world is expensive. Using the published rates from Amazon Web Services’ Interactive Video Service (IVS) — which is essentially Twitch video — live video costs for a 100 CCU streamer who streams 200 hours a month are more than $1000 per month."

Continuing on this topic, he stated:

"We don’t typically talk about this because, frankly, you shouldn’t have to think about it. We’d rather you focus on doing what you do best. But to fully answer the question of “why not 70/30,” ignoring the high cost of delivering the Twitch service would have meant giving you an incomplete answer."

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Streaming community reacts to the new payout system

Several prominent livestreaming personalities voiced their concerns about the new 50-50 split as well as the updated Ads Incentive Program on the platform. Zack "Asmongold" expressed his sentiments by tweeting:

Asmongold reacts to the platform's updated payout system (Image via Twitter)

YouTube Gaming star Rachell "Valkyrae" stated that Twitch was "killing the viewerbase" with more ads while simultaneously hurting the backbone of content creators:

YouTuber Sean "Jacksepticeye" did not hold back with his opinion and stated that the payout update was a "mess":

Here are some more content creators reacting to the updated system:

Earlier today, the well-known content creator Jerma985 shared his thoughts on the matter, and stated that he would "100%" leave the platform if he was forced to run ads during his livestreams.