Khairi Harris, who goes by the handle “KDotDaGawd” on Twitch, is hanging onto his career as a full-time streamer by a thread. Last month he found himself scanning the classifieds for a part-time job to help make ends meet; a last-second promotional contract with a PC hardware company kept his finances from flatlining. For now, at least, he can pay his bills. But that’s all.
“I still have to figure out where my next meal comes from, how I’ll put gas in my car and other necessities,” Harris told The Washington Post.
On a platform where 25% of the top 10,000 highest-paid streamers don’t even make minimum wage, promotional deals help prevent some from slipping through the cracks. But those deals might be on the verge of drying up. With inflation at a 40-year record high and the supply chain unsteady while the economy contracts, the United States seems poised to enter a recession. During recessions, companies tend to cut marketing budgets, and the ad market appears to be headed toward a slowdown. Now, some content creators on Twitch and other live-streaming platforms are starting to feel the squeeze.
“Lots of creators have felt the shift as income has decreased noticeably,” said Miguel Lozada, a senior partnerships manager at Elgato who also creates gaming-related content on YouTube, TikTok and Twitch. (Twitch is owned by Amazon, whose founder, Jeff Bezos, owns The Washington Post.)
Last month, companies canceled four out of six paid activations – marketing events that would take place on Lozada’s social media channels – that the streamer had planned for the latter portion of 2022. When Lozada made this known on Twitter, others chimed in with similar stories. One person, the “Genshin Impact” streamer and YouTuber Michael “Mtashed” Tash, said Facebook canceled a long-term contract for exclusive content after just seven months. Another smaller “Genshin Impact” creator, Stefen “SipSipStefen” Matias, said his revenue has dropped “immensely” in the past couple months due to brands delaying promotions and viewers canceling subscriptions.
“I notice it even on a smaller scale when it comes to Twitch subscriptions,” Matias told The Post. “People are really starting to think about their monthly costs and where they can save. I understand not everyone can afford a subscription especially in extremely tough times, but I just recently had to increase my ad density on stream to try to make up for some of the lost revenue from both lack of sponsorships and lower subscription rates.”
This tracks with an advisory put out by influencer talent management company Night, whose stable includes household names (if you live in a very online household, at least) like Jimmy “MrBeast” Donaldson, Hasan “HasanAbi” Piker and Asmongold, who has not disclosed his full name. In a letter sent out in June, Night CEO Reed Duchscher advised creators to diversify revenue streams and prepare a rainy-day fund while anticipating “20-30% fewer opportunities” in the coming months.
Duchscher decided to publish the letter because he and others at Night recognized how different the online landscape was during the 2008 Great Recession: YouTube was still in its nascent stages. Twitch didn’t exist. TikTok would have been unimaginable.
“If this happens, it’s going to be essentially the first recession the creator community will go through,” Duchscher said. “Maybe there were some people early on in [YouTube’s history], but Google AdSense wasn’t a thing in 2007 when the market crashed. I was like, ‘Who’s going to educate our creators on this matter? It’s got to be us.’ “
Duchscher ultimately came to the conclusion that many of his high-profile, multimillionaire creators will probably be fine; to wit, his letter includes a note about how “flaunting Lambos will be considered tone deaf when there are mass layoffs across the economy.” Smaller creators, though, need to start squirreling away a nest egg as soon as possible.
These are unprecedented times for the creator community in more ways than one. The covid-19 pandemic might have cracked supply chains and put us on track toward a recession, but it also catapulted Twitch into the limelight, growing the platform’s total hours watched by a whopping 83% in 2020 and another 45% in 2021 – from 9 billion hours in 2019 to 24 billion in 2021. This had numerous knock-on effects: Bigger, more notable companies became willing to play ball with Twitch and its stars. Those stars, in turn, achieved an unprecedented reach. Rates, as a whole, went up.
This year, by comparison, hasn’t been a bust – Twitch’s numbers remain high above their pre-pandemic peak – but it appears that the boom is over. Since the beginning of the year, hours watched have trended downward most months, largely in line with covid restrictions lifting and viewers going outside.
As a result, Twitch streamers are entering a possible recession with reduced bargaining power. Worse still, many of them might not even be aware of the problem; their industry is still relatively new, and it’s easy to ignore dark clouds on the horizon when the summer sun is still out.
“You can’t see the impact [of falling numbers] until the end of the month when you take a look at your income and go, ‘Oh, income is down a little bit. . . . Nah, it’s all right. It’ll bounce back,’ ” said news streamer and industry insider Zach Bussey, adding that June was his worst month of the year on Twitch. July, he said, was on track to be worse. “Then it goes down another five%, or another ten. You don’t see it until it’s literally at your door. You go, ‘Oh no, now I’m in a bad spot.’ “
For some content creators, big questions loom. What will happen if the downward trend keeps up in the long term? If we enter an actual recession, will companies treat content creators as riskier than other avenues for advertising and engagement, as speculative options that might not yield results comparable to buying ads on websites or TV networks?
“When working with creators directly, it’s sometimes hard to quantify what their actual influence is in terms of how many sales they’ve made and what it has done to impact the bottom line,” said Bussey. “Granted, there’s also data that says influencers dollar-for-dollar are better than a lot of other avenues if you find the right fit. But that’s also more work to find.”
Jennifer Mandeville, director of media strategy at marketing services company Merkel, believes that if a recession hits, companies might ultimately become more willing to do that work, simply because the end result is more cost-effective – and timely – than breaking the bank on a big name.
“Most of the spending points toward that mid-tier influencer,” she said, referring to influencers with hundreds of thousands – but not millions – of followers. “Yes, mega influencers get amazing reach, but depending on the brand you might want those smaller influencers who can authentically speak to their communities about what’s going on in the world and how these different brands or products can naturally fit into the lifestyle without being super pushy or sales-y.”
Rick Heaton, director of influencer and community activations at digital agency YellowPike Media, has already started employing this approach.
“I’m looking at a lot more mid-, micro- and even nano-sized influencers,” he said, “where you can generate big impact and hit client [performance indicators] with small spends across many influencers on a small budget. That gives us an opportunity to expand into more verticals and build relationships with brands and partners who might not think there was value in or had a budget to support influencer activations. So it’s a kind of grow-the-base approach to things I feel is important to weather the recession.”
Even so, these sorts of opportunities remain out of reach for the majority of creators in a field of millions, where qualifying as a “micro” influencer still requires garnering tens of thousands of followers.
In recent times, Twitch offered an alternative in the form of its ad incentives program, which – if streamers meet a monthly hours-streamed requirement – pays out 55% of the revenue for each individual ad that runs during broadcasts.
“I look at this as a way for Twitch to try to counteract the impending recession by giving incentives for streamers like me to run more ads and counter the potential decrease in spending,” said Daniel “Onepeg” Marshall, a Twitch partner and former financial services worker. “This also monetizes the viewer in a way that says, ‘Stay and hang out. Don’t worry about spending money. I’ll just get the bag from the mother ship and we’ll all be just fine.’ It’s a great move, as long as the viewer doesn’t mind the annoyance of seeing a 2-3 minute series of ads every 20 minutes.”
But already, these payouts have proved inconsistent. On top of that, payout estimates are based on Twitch ad buy data from 2021, the platform’s best year on record. In a recession, those numbers are likely to go down, not up.
“Twitch wants me to stream 47 hours [in one month] for $74,” said Harris, “which is insane because in Ohio, working a regular nine-to-five job, you’d be making at least $800.”
For now, the creator economy seems to have entered a holding pattern, with companies employing a wait-and-see approach. But Bussey and Duchscher agree that creators cannot afford to wait. They recommend putting eggs in as many baskets as possible, as soon as possible.
“If you have an Etsy shop that results in a little bit of income, perhaps put a little bit more time into that,” said Bussey. “If you have a Patreon or a Fanhouse or Onlyfans or whatever, look at ways to try to bring more people into that fold where you’re going to get a higher cut than you would on Twitch.”
“You actually need to spread this out,” said Duchscher, “because if the recession completely upends the brand deal market and you’re a mid-level creator, that revenue is gone and now all of a sudden you’re lost.”