It’s not Prime Day; it’s not the Ring; it’s not even AWS, its tremendously profitable cloud computing division. 

Instead, investors should start paying attention to Amazon’s live streaming platform, Twitch, which may be relatively unknown to older generations, but has become a live-streaming staple among Gen-Z and Gen-Alpha. 

Twitch is best known for video-game streaming and is “the largest streaming platform for video gamers, by far,” Martin wrote. Yet the service has expanded far beyond the gaming world. 

Gaming and beyond

Twitch, Martin noted, allows Amazon access to an advertising market the company wouldn’t otherwise have. Nearly two-thirds of Twitch users are men, and nearly three-quarters of them are under 34, Martin wrote. For Amazon as a whole, only 45% of its customer base is under 34, and most of them are female. 

“Endemic advertisers (ie., video games & accessories) that advertise on Twitch also buy ads on AMZN as well, and many of these advertisers would not be clients of AMZN without Twitch,” she adds. “Similarly, brands can buy ads in Twitch to access hard-to-reach young men, most of whom do not watch traditional TV.”

It’s not just men, however. At any given moment, over 2.5 million people are watching someone stream on Twitch. The service boasted 35 million average daily users in 2022, and 1.3 trillion minutes watched on the platform that same year, according to its advertising page. 

Those startling numbers don’t just come from video games: Martin likens Twitch’s market dominance to that of Google’s YouTube. 

“YouTube has carved out the VOD (video on demand) space and Twitch has carved out the live-streaming space,” Martin wrote.

Twitch has boosted the careers of ultra-popular Gen-Z comedians: most famously,  22-year-old Kai Cenat (who has the most followers on the platform, at 12 million), gained popularity on Twitch for his 24-hour streams and pranks. Celebrities from Drake to IceSpice have sat down on Twitch to joke with Cenat; once, Drake bet $121,000 on Cenat beating rapper 21Savage in a game of NBA 2K (Cenat lost, then broke his streaming set-up out of rage). 

The platform has also become popular among young political commentators, such as Hasan Piker, better known as Hasanabi on Twitch, where he espouses left-wing political takes to his 2.1 million followers. On one pandemic evening in 2020, Piker streamed with Rep. Alexandria Ocasio-Cortez (D-N.Y.) to play Gen-Z-favorite Among Us and nearly broke the platform as 400,000 viewers scrambled to watch. As Ocasio-Cortez played, she also chatted about health care policy and bantered with the constant stream of comments from viewers. 

“I think the lack of predictability on a stream is what makes it compelling,” Ocasio-Cortez, who still occasionally streams on Twitch, previously told the Washington Post. “Being able to be comfortable in the chaos of inviting so many people in the conversation … you need to be okay with that.” 

Creator revenue 

Those who embrace the mayhem, and get popular off it, can reap sizable rewards: A data leak from 2021 suggests that the platform’s top creators make $8 to $9 million a year from the platform. 

Streamers get paid through a subscription model: viewers can subscribe to their favorite content creators for a minimum of $4.99 a month to gain access to perks like access to emotes – moving emojis – badges, and ad-free viewing.  However, the platform has undergone controversy with creators over their payouts.

Some creators rebelled against Twitch last year after it decreased the amount of subscription revenue it allotted to Partners (content creators who meet certain criteria). The current split is 50/50, a significant decrease from the original 70/30 split that allowed creators to build livelihoods and businesses on the platform. 

Twitch later announced the Partner Plus Program, restoring the 70/30 split for only the first $100,000 earned by top-tier creators, a group that includes just the 1,066 most popular creators on Twitch’s 14 million-person platform.

Some creators still complained about the limited number of people eligible for the new Partner Plus program and the various terms and conditions. “This is so unobtainable right now based off individual and reoccurring subs…this doesn’t help the streamers at all,” Twitch partner PaladinAmber said in response to the new program.

Since then, Twitch CEO Dan Clancy has been working overtime to restore relations with creators. In January, Clancy announced a new system: anyone with more than 100 paid subscribers would now receive 60% of the money fans pledge. 

“Twitch has made some good moves to help creators make money, but it’s still tough to make a living just from streaming alone,” Jerome Aceti, a Minecraft Twitch streamer, told Fortune. “A lot of us have to rely on ads, product promotions, and other ways to bring in income.” 

Aceti has only recently expanded to Twitch from Youtube, where many of his 5.41 million followers know and love him as JeromeASF.

“Twitch is about being in the moment and engaging with viewers live,” Aceti said. “It used to feel more like a small, tight-knit community, but now it’s this huge platform with all kinds of content and different ways to engage your fans.” 

Despite its popularity, the platform has struggled with profitability, laying off 35% of its staff in January to help pay the prohibitive costs associated with supporting 1.8 billion hours of live video content monthly. 

Amazon first acquired Twitch in 2014 for about $970 million, when Twitch had a revenue of about $72 million, Martin wrote. In 2023, the website generated approximately $3 billion in revenue, according to Martin. She upgraded Amazon’s price target to $210 from $205 while maintaining a Buy rating on the stock. Martin’s new price target is “based on the upside we calculate from Twitch.”