Understanding the 4 Key Areas of Monetization on Twitch and How to Maximize your Earnings
Without a doubt, planning and executing a proper monetization plan for your Twitch stream is critical. The difference between having a good plan and not having one could literally be life changing.
A solid monetization plan could be the difference between become a full-time professional streamer and being stuck as a amateur content creator.
Remember you don’t need 10000 viewers to make a great income, but rather you need to add value for those who do enjoy your stream such that they feel compelled to take action with their wallets.
Let’s break down the types of monetization that we often see on Twitch..
Breakdown of Monetization Types on Twitch
Although there may be other forms of monetization, these 4 encompass most options currently available. You’ll want to implement all of them if possible in order to maximize your Twitch earnings.
First and foremost, the most common way to earn money on Twitch is receiving a donation or tip. These types of payments come from viewers as a one-time cost.
Second would be the Twitch subscription. It is $5/month and the amount is split between the streamer and Twitch. This is a recurring fee unless the viewer cancels the re-subscription.
The third type of monetization that is quite common is affiliate sales. The most popular is G2A. Affiliate sales give streamers a percentage when viewers click through an affiliate link.
The final and most important type of monetization is the internal sales funnel. This is key for long-term stable revenue generation. I’ll explain why below.
Donations are the easiest way for viewers to reward content creators for their hard work and entertainment value. Donations are typically received through Paypal and are often processed via third party apps.
One of the most popular features of the last few years is the ability to play a custom notification live on stream when a donation comes in. The functionality can also be extended to add a donation message on screen as well as have a robotic voice read it out loud. These have shown to be very popular on various streams but are also becoming yesterday’s news quickly.
Typically these types of functionality are taken advantage of by bigger streamers and by the time smaller streamers implement the impact can often be lost.
Nonetheless, donations still make up a big part of the streamer’s revenue.
Some keys to ensuring that you maximize your donations are:
- Recognition for the donator both immediately and long-term if the donation is substantial
- Incentivize by giving benefits for donating certain amounts
- Interesting on-screen alert and sound upon receiving a donation
Subs are great because they are easy to set goals for and provide a nice consistent monthly income. Albeit 50% of a subscription goes to Twitch so that is quite a large percentage for not doing much besides providing the platform. Of course we wouldn’t be here without Twitch but 50% is still high considering you are doing all the work that generated that subscription.
I’ve also written about why the subscription model may not be a good one long term for Twitch streamers but that is only a prediction. Only time will tell if subscriptions are a good model for revenue generation in the coming years. My main concern is that people can only afford to sub to so many channels so are more channels arrive will there be less subscription money to go around or will viewers expand their budgets for content the love?
Without a doubt, subscriptions are best utilized by placing various benefits to viewers behind the paywall. Meaning, unless they are willing to buck up the monthly five dollars, then they won’t be able to do what other subs are doings.
Typically, sub perks are chatting privileges (important in a large stream) and sub emotes. Viewers love custom emotes from their favorite streamers. As you gain more subs you unlock the ability to have more custom emotes for your username.
If you haven’t realized it yet, you need to be a Twitch partner to have access to the ever-elusive Sub Button.
Affiliate commissions can be great for bolstering your monthly revenue. Just a few sales a month can add up but it really depends on which affiliate program you are with.
So many people added G2A links to their stream in the past year that it quickly got over saturated and typically useless.
It’s important that you source your own affiliate products and that you actually vouch for the product or company you are promoting.
Many people think they can just add a link to their stream and they will make money. It’s not that simple.
The power of affiliate marketing comes from the streamer actually vouching for the affiliate product such that the viewer feels comfortable buying and compelled to do so.
What most people don’t realize is that your affiliate products don’t have do to anything with the game you play. They can be completely unrelated. What is important is that the demographic is correct. What you are promoting is also interesting to your viewer demographic.
Obviously game companies are relevant so G2A and like makes sense, but you want to be unique and have an opportunity to provide something different to viewers.
The best thing about affiliate marketing through you Twitch stream is that you don’t have to do much other than post a link and promote it via talking about it. There is also no limit to how many products you promote!
Internal Sales Funnel
The best for last…so what is an internal sales funnel?
Basically this would comprise of content or digital products that you produce and own yourself. The content would be of higher quality and be worthy of content locking behind a pay wall. Maybe this is educational content or something of slightly higher value than you typical live stream show.
A sales funnel consists of all your products and has them situated in such a way that your top paying viewers would likely buy all of the products.
Here is a basic sales funnel for let’s say a Hearthstone streamer:
- Free Twitch content (get their attention)
- Check out my free HS training guide (get their email)
- Get my 8-part video series for serious HS players ($9)
- Get professional HS coaching ($50+/hour)
A sales funnel is designed to drive customers through the product set incrementally. The reason it is done this way is because when people first meet you or watch you they aren’t ready to buy your most expensive products. It takes time and persuasion to click the buy button. Email can be great for pushing people through the sales funnel especially when you use autoresponders.
Note the interesting use of a lead magnet here – the training guide. A lead magnet is designed to attract only the people who would eventually buy your more expensive products.
Also note the low cost of the 3rd product in the list, the video series. The reason for the low cost is to get them used to giving you money starting with a very low amount. The goal is to convert customers here not to make a lot of money.
Well that gives you a lot to think about as you plan and execute your monetization strategy. At TwitchMeta.com we are experts on monetization and marketing so feel free to reach out if you would like to work with us more extensively to improve your Twitch stream.