Let's start with a hypothetical scenario ...
It's Aug. 22 and Middle-earth: Shadow of War has just launched. Joe Streamer on Twitch got the game a few days ago from Warner Bros. Interactive Entertainment, and he's finally able to start sharing it with his 10,000 followers.
Joe Streamer also sells Shadow of War through his Twitch page, compliments of a new feature the streaming service is set to offer. For every copy he sells via Twitch, he'll pocket 5 percent of that money himself.
How enthusiastic do you think Joe Streamer will be when he talks about Middle-earth: Shadow of War? Whether or not Joe Streamer is an honest dude, it's the potential for dishonesty that counts here.
This is just one of the sticky problems Twitch could soon find itself facing as it starts letting streamers sell the games they're playing.
How it will work
Twitch's partnered streamers — which is to say, streamers that have monetized their accounts — will have the ability to opt into selling whichever game they're streaming directly from their profile page. For any sales made there, 70 percent goes to the game's publisher and 5 percent goes to the streamer (the rest goes to Twitch).
The numbers themselves aren't problematic. It's common for platform holders like Apple (in the App Store) or Valve (in Steam) to take a 30 percent cut of each sale. Twitch appears to be carving out 5 percent of its own cut for streamers.
The problem — or, more precisely, the potential for problems — is how all of this looks from the outside.
Streamers benefit directly when someone buys whichever game they're streaming. This is a quantifiable benefit: based on the numbers and details Twitch has provided, every $60 game sold amounts to $3 in the streamer's pocket.
Whether or not there's disclosure near the purchasing link on the Twitch page — which is a whole other issue — the new system still creates financial incentive for streamers to be just a little bit kinder about the things they're playing. They become, for all intents and purposes, salespeople.
It's a move that stands in stark contrast to Twitch's stated mission of letting streamers share games "authentically with friends and fans."
The disclosure issue also raises questions.
In the documentation that Twitch has provided so far, there is no mention of disclosure requirements for streamers earning income from game sales. The closest we get is an explainer laying out how streamers can sign up.
The text of that agreement is not posted online for public consumption. And nowhere in the new documentation for Twitch-based game revenues is there any mention of how disclosure requirements will work with the new system in place.
(Here's the rundown of the new service for consumers, and here's the one for publishers and streamers.)
Now, Twitch does have disclosure rules already ... sort of. A 2014 post on the site from SVP of Marketing Matthew DiPietro stresses the importance of "transparency in sponsored content and promotion."
The post addresses the specifics of how sponsored content on Twitch is marked, and advises all broadcasters to adhere to FTC guidelines when managing their sponsor relationships. You can (and should, if you like watching Twitch streams) give it a read right here.
The new service raises questions
There's just one problem: the rules laid out in that post apply specifically to Twitch-driven campaigns. Beyond recommending an adherence to FTC regulations, the site is largely hands off when it comes to telling streamers how they should or shouldn't disclose on their own streams.
That might have worked in the past, but once again: the new service raises questions. With Twitch and streamers both standing to earn revenue from game sales on the site, a blog post from 2014 explaining how sponsored content works — and merely recommending an adherence to existing rules — doesn't feel like it's enough anymore.
We've reached out to Twitch for clarification on a few points. A spokesperson already passed along the sponsored content blog post linked above.
We've also asked to see the newly amended portions of the partner agreement, as well as any projections Twitch might have regarding what the in-channel sales expectations are.
In other words: we're looking to glean a better understanding of what partners are agreeing to when they sign up to earn revenue from games sales on their channels. We're also trying to get a better sense of how Twitch views this new addition to its business as an income opportunity.
We're told that most of the commerce team at Twitch is in transit to San Francisco right now, to attend the annual Game Developer's Conference this week. Don't expect to see the projections we asked for, however; per a spokesperson, Twitch does not disclose internal financial projections.
We'll update with additional responses as we receive them.
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