Azubu, Kamcord and Mobcrush

27 May Azubu, Kamcord and Mobcrush

Recently 3 startups were founded to compete against Twitch, the game watching platform (GWP). The figure shows Azubu, Kamcord and Mobcrush and the $millions each raised, for a total of $160 million.

What happened? Little good. Azubu spent most if not all of the $90 million and transitioned to another streaming firm, Smashcast. Azubu still owes prize money to several streamers. Kamcord moved out of GWP by 2016 and was bought by Lyft. Mobcrush is still a GWP. It appears that most of the collective $160 million for the 3 firms is gone.

In game watching (esports), there are 4 types of parties.

a) Publishers, or game firms, like EA, Activision, Riot.

b) GWPs, like Twitch and Youtube, Caffeine, Mixer, Azubu, Kamcord, Mobcrush.

c) Streamers, or gamers.

d) Fans. Who watch streamers.

Consider the situation from the point of view of one of those startups. It is a GWP. So all the other GWPs are competitors. It certainly cannot get help from them.

A related problem is that those 3 startups all aspired to be or replace Twitch. Fans would come to their site to watch live or recorded gaming. Look at the publishers’ viewpoint. If Azubu, say, replaced Twitch, this is just a middleman replacing another middleman. Nothing has changed for the publishers. So the startups could also expect no help from the publishers.

By elimination, this only leaves the streamers and fans that the startups can try to recruit. So that’s where they went. They signed up top streamers to play and broadcast on their site.

Another problem is what the tech products made by the startups had no tech advantage over Twitch. Of course the startups each said they had unique tech. What else could they say? But unique does not mean better. If you code, you can make your program unique at the UX level by trivial tweaks of the graphics.

The problem is that to be a GWP needs a lot of capital to host and broadcast the games, live or recorded. Incoming bandwidth is small. But outgoing bandwidth are those games being multiplied and broadcast. To actually own the data centers to do this is expensive. Only slightly less so is to rent space, CPU and bandwidth from Amazon Web Services, Microsoft Azure or Google Cloud. Another consideration is that AWS might be a fraught choice. Amazon owns Twitch. Competing against Twitch by having AWS host your (virtual) machines may have seemed dubious to the startups. (I personally suspect AWS would have treated them fairly.)

So each startup, with no tech advantage, was having to chase streamers and fans, to try to persuade streamers to move to them. How persuasive? Money. Perhaps by offering a streamer a higher cut of the ad revenue than Twitch was offering. Or by hosting tournaments with large prize monies.

But having to go up against Twitch by spending money was a loser’s game. Amazon was already over $500 billion in mid-2010s. It is now (2020) over a $trillion. Twitch had incumbency and deep pockets.

Conclusion

Twitch cannot be challenged by a startup with no tech advantage.