Kick is “burning money” paying for Twitch’s streaming service from Amazon

New streaming platform Kick has positioned itself as a direct rival to Twitch, tempting streamers to leave and join them. But a former Amazon engineer argues that Kick is in fact “subsidizing” Twitch by paying Amazon for their streaming service.

Kick was launched in coordination with gambling platform Stake and popular Twitch streamer Trainwreck. Although the ownership structure isn’t totally clear, what is clear is that Kick is presenting itself as a better option than Twitch.

Kick regularly tweets about their superior sub revenue split, offering 95% to streamers, vs Twitch’s 50%. This has raised some eyebrows about the site’s sustainability, considering the costs required to run the platform.

However, some of these costs are actually directly paid to Amazon – Twitch’s owner.

Ex-Twitch engineer explains Kick’s Amazon setup

Cyrus Hall worked at Twitch and Amazon for a decade as part of the team that worked on the integration of the platform’s streaming service with Amazon Web Services (AWS) in 2020.

On Twitter, he explained that Kick is “subsidizing Twitch by paying to use the Twitch video system via AWS” – and that this comes at a significant cost.

So, in short, Kick is subsidizing Twitch by paying to use the Twitch video system via AWS. I mean, yes, I too think IVS is the best video system for this use case, but paying ~8-10x cost is not a sustainable growth plan.

— Cyrus Hall (@cyrusphall) April 11, 2023

“I too think IVS is the best video system for this use case, but paying ~8-10x cost is not a sustainable growth plan,” Hall said.

Hall speculates that Kick’s current system will be “burning money,” with the eventual goal of switching to their own CDN (content delivery network) when the time is right.

So: blitz-scale on while burning money (VCs or otherwise), and then switch? That's effectively what Twitch pulled off, but the window to land it was very narrow.

— Cyrus Hall (@cyrusphall) April 11, 2023

This of course raises the question again around the sustainability of Kick, given the 95% subscription revenue split.

However, as mentioned, Stake.com is a stakeholder in Kick – so the ultimate goal may not be generating profit from Kick itself anyway, but rather directing users to the gambling site.

Esports veteran Scott ‘SirScoots’ Smith described Kick’s situation as entirely beneficial to Amazon overall, as if Kick does continue to grow and challenge Twitch, “so will the checks they have to write to Amazon.”

I find it cool that Kick is actually a client of Amazon and as that site grows, so will the checks they have to write to Amazon. You all think Amazon loses here?

— Scott Smith (@SirScoots) April 12, 2023

And Kick has been growing rapidly. According to SimilarWeb, Kick.com received 58 million visits in March – up from only 13 million in January and 29 million in February.

Twitch, for comparison, averages around 1 billion visits per month, so there is still a chasm between the two live streaming platforms. Either way, Amazon stands to benefit.