This is how Twitch became a $970 million company.
The founder of the video game streaming site Twitch, Justin Kan, explained on stage Monday at TechCrunch Disrupt London exactly how the site grew. Acquired by Amazon for $970 million in August, the site grew from humble beginnings to dominate the online-game-streaming industry.
Kan explained that Twitch had its start as justin.tv, a startup founded in 2005 when he was studying for a physics and psychology degree at Yale. His first company, Kiko Software, was an online calendar that predated Google's calendar efforts.
Eventually Kan and Kiko's other founders realised that the Kiko calendar wasn't taking off, so they hatched a plan: Sell it on eBay. The auction page went live, and weeks later Kiko Software was sold online for $258,100.
The team behind Kiko went on to create justin.tv. Kan said they wanted to create a "Big Brother-style" site that would stream their lives. In effect, it pioneered the practice of "lifecasting," a practice of streaming your life around the clock that became popular as the price of webcams and broadband plummeted.
This is what the site looked like in 2007:
The initial response to justin.tv was mixed. People hated the reality show concept, but they kept asking how they could use the site to create their own online video streams.
One problem that Kan encountered was an early precursor of so-called "Swatting" attacks, where popular online video streamers have their apartments raided by the police after internet pranksters pretend that a shooting or stabbing has taken place. Kan experienced one of the first online police raids in 2007 while broadcasting on justin.tv.
Justin.tv eventually pivoted to allow users to stream their own video online.
Back in 2005 when justin.tv was started, streaming video games was tough, Kan said, adding that it was "technically complex" for people to create a streaming setup, as they needed webcams, microphones, and specialist software. And so one of the first hires justin.tv made was a specialist video game streamer who helped people set up video game streaming.
Since Twitch started as an online platform for videogame streaming, the industry has grown immensely in size. Games are now the No. 1 category on YouTube, Kan says. More than 55 million people watch video game streamers on Twitch every month.
The site falls right behind Netflix, Apple, and Google when it comes to peak internet traffic in the U.S., according to The Wall Street Journal. It accounts for 1.8% of peak internet traffic, which is just above Hulu at 1.7%.
58% of Twitch users spend more than 20 hours a week watching videos on its site.
This chart shows how Twitch dominates the video streaming space online:
Twitch has become the go-to site for video game fans looking to stream online video. The site has given rise to a collection of streaming celebrities who go on to compete competitively, some of whom earn up to $100,000 annually from their streams.
It also has become home to bizarre channels like the groups of people who play Pokemon at the same time.
Here's a video of Twitch's most popular video game streamer, Syndicate, reaching 1 million followers. This happened, aptly enough, as he was streaming live online.
Kan ended his talk with a relatively uplifting message: "If justin.tv can succeed, then nobody has an excuse. It was a terrible idea."