As Twitch backpedals rev share policy, UTA’s Damon Lau thinks creators are poised to win

At least, that’s how Damon Lau, head of gaming and esports at United Talent Agency, is measuring the recent trajectory of the industry. With video streaming platforms like Twitch constantly changing the revenue share models for creators on the platform, competing platforms like YouTube, Kick and even TikTok are stepping up to try and win over creators’ exclusive streaming rights. 

On the latest episode of the Digiday podcast, Lau discusses how his clients are thinking about their partnerships with streaming platforms, as well as how advertisers are starting to go to creators themselves for native advertising deals, rather than going through the platforms with their ad dollars.

Below are highlights from the conversation, which have been lightly edited and condensed for clarity. 

In the streaming war, Twitch may have put itself in a losing position  

There’s not only been a change this past month, but in the past six months to even a year, Twitch has had a lot of changes from a leadership perspective, and have constantly tried to change the business model of what it means to be a creator on their platform. And the reality is, they’ve made so many changes and backpedaled a number of times — It’s quite frustrating for streamers.

Most of our clients are spending anywhere between 20 to 40 hours a week on a single platform, so it’s very much a full time job, five days a week, sometimes six days a week. Twitch has constantly changed the business model and the different types of rev share. … They went from a 50-50 to 70-30, back to 50-50. I think as [streamers] evaluate where they spend their time … it’s challenging for creators to trust the fact that the business that they’re building on the platform is going to be lucrative enough for them to continue.

If the opportunities to be able to generate revenue on the platform don’t match the opportunity that they see in other platforms, there’s always a consideration to move to other places, because the reality is, other streamers have moved away from Twitch, have done it very successfully and have continued to grow the business off platform.

The possible thaw of the esports winter

The esports winter narrative has come up specifically in the past six to 12 months, revolving around esports organizations that had very large valuations pre-pandemic. And the reality is that I think that esports, at its core, is facing a few very, very challenging times. When it comes to specifically the esports organizations, and the ones that had not diversified their business in the past three to five years, it’s very challenging for them. 

Esports [is] only 10% of the content that’s being viewed on platforms like Twitch. Esports itself, the viewership and the business might be feeling an impact. But broadly, the gaming media business — which esports is a small subset of — it’s actually flourishing and continuing to grow.  From a macro perspective, I’m still continuing to see more and more brands spend significantly in this space.

The ad dollars are starting to shift from platforms to gamers 

When [advertisers] approached us initially, five or six years ago, it was purely awareness [campaigns]. But after everyone knows, I think really where marketers are starting to shift is trying to understand performance. And a key component to performance is trying to reach the demographic that’s most impactful to you. 

When you look at a platform, like Twitch, let’s just say you take the top 10 [creators] on that platform with the biggest audiences. … A lot of them have highly engaged audiences that pay $5 to essentially not see any type of programmatic advertising at all. So by design, interestingly enough, the platform actually eliminates the most engaged subscribers of every single content creator with a fee.

That’s where native advertising became a much more meaningful part [of brands’ marketing strategies within gaming].