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As the US teeters on the brink of recession, Twitch streamers are tightening their belts

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Khairi Harris, who goes by the handle “KDotDaGawd” on Twitch, clings to his full-time streaming career by a thread. Last month, he found himself scouring the classifieds for a part-time job to help make ends meet; a last-second promotional deal with a hardware company kept his finances from stagnating. For now, at least, he can pay his bills. But that’s all.

“I still have to figure out where my next meal is coming from, how I’m going to get gas in my car, and other necessities,” Harris told The Washington Post.

On a platform where 25% of the top 10,000 paid streamers don’t even earn minimum wage, promotional offers help prevent some from falling through the cracks. But those deals could be about to dry up. With inflation at a 40-year high and an unstable supply chain as the economy shrinks, the United States looks set to enter a recession. During recessions, companies tend to cut their marketing budgets and the advertising market seems to be heading for a downturn. Now, some content creators on Twitch and other live streaming platforms are starting to feel the pressure.

“Many creators have felt the shift as revenue has dropped significantly,” said Miguel Lozada, senior partnerships manager at Elgato, which also creates gaming-related content on YouTube, TikTok and Twitch. (Twitch is owned by Amazon, whose founder, Jeff Bezos, owns The Washington Post.)

Last month, the companies canceled four of six paid activations — marketing events that would take place on Lozada’s social media channels — that the streamer had planned for the latter part of 2022. When Lozada made it known on Twitter, others chimed in with similar stories. One person, “Genshin Impact” streamer and YouTuber Michael “Mtashed” Tash, said Facebook canceled a long-term contract for exclusive content after just seven months. Another smaller “Genshin Impact” creator, Stefen “SipSipStefen” Matias, said his revenue had “significantly” dropped over the past two months due to brands delaying promotions and canceling subscriptions. the television viewers.

“I even notice it on a smaller scale when it comes to Twitch subscriptions,” Matias told The Post. “People are really starting to think about their monthly costs and where they can save. I understand that not everyone can afford a subscription, especially in extremely difficult times, but I recently had to increase the density of my streaming ads to try and make up for some of the revenue lost to both the lack of sponsorships and lower subscription prices.

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This follows a notice from influencer talent management firm Night, whose stable includes household names (if you live in a very online household, at least) like Jimmy “MrBeast” Donaldson, Hasan “HasanAbi” Piker and Asmongold, who did not disclose his full name. In a letter sent in JuneNight CEO Reed Duchscher advised creators to diversify their revenue streams and prepare a rainy day fund while anticipating “20-30% less opportunity” in the coming months.

Duchscher decided to publish the letter because he and others at Night recognized how different the online landscape was during the Great Recession of 2008: YouTube was still in its infancy. Twitch did not exist. TikTok would have been unimaginable.

“If that happens, it will essentially be the first recession the creator community has gone through,” Duchscher said. “Maybe there were people at the beginning of [YouTube’s history], but Google AdSense didn’t exist in 2007 when the market crashed. I was like, ‘Who is going to educate our creators about this? It must be us. ”

Duchscher eventually came to the conclusion that many of his high-profile multi-millionaire creators are likely to be fine; namely, his letter includes a note about how “Lambos’ posting will be considered tone deaf in the event of massive layoffs in the economy.” Small creators, however, need to start skimming a nest egg as soon as possible.

These are unprecedented times for the creator community in more ways than one. The covid-19 pandemic may have cracked supply chains and put us on the road to a recession, but it has also catapulted Twitch into the limelight, increasing total hours watched. of the platform by 83% in 2020 and 45% in 2021 – from 9 billion hours in 2019 to 24 billion in 2021. This had many ripple effects: larger and more notable companies accepted to play ball with Twitch and its stars. These stars, in turn, reached unprecedented reach. Rates, overall, have gone up.

This year, by comparison, hasn’t been a slump — Twitch’s numbers remain high above their pre-pandemic peak — but it looks like the boom is over. Year-to-date, hours watched have tended to drop most months, largely in line with the lifting of covid restrictions and viewers going out.

As a result, Twitch streamers are entering a possible recession with reduced bargaining power. Worse still, many of them might not even be aware of the problem; their industry is still relatively new and it’s easy to ignore the dark clouds on the horizon when the summer sun is still out.

“You can’t see the impact [of falling numbers] until the end of the month, when you take a look at your income and say to yourself, “Oh, income has gone down a bit”. … No. Everything is fine. It’s going to bounce back,” said news streamer and industry insider Zach Bussey, adding that June was his worst month of the year on Twitch. July, he said, was about to get worse. “Then it drops another five percent, or another ten. You don’t see it until it’s literally at your doorstep. You go, ‘Oh no, now I’m in a bad place.’ ”

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For some content creators, big questions loom. What will happen if the downward trend continues in the long term? If we go into a real recession, will companies treat content creators as more risky than other means of advertising and engagement, as speculative options that may not yield comparable results to buying ads on websites or television networks?

“When you’re working directly with creators, sometimes it’s hard to quantify their real influence in terms of the number of sales they’ve made and the impact on the bottom line,” Bussey said. “Certainly, there is also data that indicates dollar-for-dollar influencers are better than many other avenues if you find the right person. But it’s also more work to find.

Jennifer Mandeville, director of media strategy at marketing services firm Merkel, believes that if a recession hits, companies may ultimately become more willing to do this work, simply because the end result is more profitable — and timely — than break the bank on a big name.

“Most of the spending is directed to this mid-tier influencer,” she said, referring to influencers with hundreds of thousands — but not millions — of followers. “Yes, mega influencers have incredible reach, but depending on the brand, you might want these smaller influencers to be able to speak authentically to their communities about what’s happening in the world and how these different brands or products can naturally fit into the lifestyle without being super pushy or commercial.”

Rick Heaton, director of influencer and community activations at digital agency YellowPike Media, has already started using this approach.

“I’m looking at a lot more medium, micro and even nano-sized influencers,” he said, “where you can drive big impact and reach the customer. [performance indicators] with small spending on many influencers with a small budget. It gives us the opportunity to expand into more verticals and build relationships with brands and partners who might not think there was value or didn’t have the budget to support the influencer activations. So it’s kind of a basic growth approach to the things that I consider important to get through the recession.

Even so, these kinds of opportunities remain out of reach for the majority of creators in a field that has millions of people, where qualifying as a “micro” influencer still requires amassing tens of thousands of followers.

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Lately, Twitch has offered an alternative in the form of its Advertising Incentives Program, which – if streamers meet a monthly streaming hours requirement – ​​pays out 55% of revenue for each individual ad shown during broadcasts.

“I see this as a way for Twitch to try to stave off the impending recession by getting streamers like me to run more ads and counter the potential drop in spending,” said Daniel “Onepeg” Marshall, a Twitch partner. and former financier. service worker. “It also monetizes the viewer in a way that says, ‘Stay and hang around. Don’t worry about spending money. I’ll just get the bag from the mothership and everything will be fine. This is a great decision, as long as the viewer doesn’t mind seeing a series of 2-3 minute commercials every 20 minutes.

But already, these installments have proven to be inconsistent. On top of that, payout estimates are based on Twitch ad purchase data from 2021, the platform’s best year ever. In a recession, these numbers are likely to fall, not rise.

“Twitch wants me to stream 47 hours [in one month] for $74,” Harris said, “which is insane because in Ohio, working a regular nine-to-five, you would make at least $800.

For now, the creator economy seems to have entered a waiting pattern, with companies taking a wait-and-see approach. But Bussey and Duchscher agree that creators can’t afford to wait. They recommend putting the eggs in as many baskets as possible, as soon as possible.

“If you have an Etsy shop that generates a bit of revenue, maybe spend a bit more time on that,” Bussey said. “If you have a Patreon or a Fanhouse or Onlyfans or whatever, look for ways to try and bring more people into that fold where you’ll get a higher cut than on Twitch.”

“You actually have to spread that out,” Duchscher said, “because if the recession completely upsets the brand deal market and you’re a mid-level creator, that revenue is gone and now, all of a sudden, you are lost.”

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