How to Make Money on Twitch Live Streaming
Over the last three years, the audience of Twitch viewers and broadcasters has tripled. If you’ve been waiting for a sign to finally start monetizing your channel, this is it.
In this article, we’ll consider the four most common options for making money on live streaming through Twitch so you can seize your piece of the pie too.
We bet you’ve seen how it works. Streamers encourage their followers to donate so they’ll spend more time broadcasting. They can directly ask for a donation or set up a goal that’s visualized as a progress bar on the screen.
There two options for enabling donations on a stream:
- Built-in mechanics that the broadcasting platform offers
- Third-party services
Let’s have a look at both.
Bits aka official Twitch donation system
Twitch has Bits, a virtual currency that viewers can buy with real money and use to Cheer (the official term) a streamer. The more Bits you Cheer with, the more expressive the Cheermote, the animated Twitch emoji, is.
For each Bit a viewer spends on cheering a streamer, the streamer typically receives 1 cent. You can set the minimum threshold of Bits for cheering to avoid craziness in the chat when one user makes a sequence of Cheers using just one Bit every time.
Please note that not everyone can accept Bits. To do so, you need to be either a Twitch affiliate or a partner. On the upside, Bits are supposed to be the most reliable donation method because Amazon Payments protect such payments against chargebacks (more on that a bit later) and any other potential issues.
Third-party donation services
If you don’t feel like sharing your tips with Twitch, you can set up a third-party service for collecting donations.
Again, there’s more than one way to set up accepting donations. You can receive tips directly, for example, by providing your PayPal wallet or even a wallet for cryptocurrency if you have one. Alternatively, you can set up a donation page on a service, such as StreamLabs, that will combine several methods for payment, making it easy for any viewer to give a tip.
Despite the convenience of this method, here’s a word of warning. There are cases when scammers make fake PayPal donations and later request a chargeback, leading to the streamer losing the donation and paying a fee for the transaction. In October 2020, AverageJonas was donated $5,400, which ended up with the streamer having to pay back $5,800 (including $400 of transfer fees).
Is it possible to avoid this situation? Well, there’s no guarantee but here’s a few tips on how to protect yourself:
- Place a disclaimer that tips and donations are voluntary.
- Save screenshots of a suspicious donation.
- Include clips of the user's donation alert going off and them reacting/talking about it.
- Leave funds for 180 days in case of a chargeback so you can refund.
Pros & cons
Subscription is an excellent way for streamers to establish a recurring income flow. Still, it’s important to distinguish two terms: subscription and following.
Following works similarly to any social media: if you follow someone, you’ll see their account in your follow list, see updates, and get a notification when the stream is live. Following is free.
Subscription is a paid feature on Twitch; it’s a way to support your favorite streamers financially.
Official Twitch subscription feature
Again just like with donations, the Twitch subscription button is available only to Affiliates and Partners. As soon as you’re recognized as such, the Subscribe button will automatically appear.
There are three price tiers: $4.99, $9.99, and $24.99 per month. Each tier unlocks different perks, for example, sub-only emote sets or badges. Alternatively, users can subscribe “for free” if they have an Amazon Prime membership.
The subscription payments are divided 50/50 between the streamer and Twitch.
External subscription services
For those who don’t have Affiliate or Partner status, various third-party services come to the rescue. One of the most popular is Patreon.
Even better, Twitch subscriptions or using Patreon is an open question. On the one hand, Patreon is more generous to streamers because it charges just 5% of payments. On the other hand, Twitch is still the go-to choice for many because of its engagement mechanics. Even though you earn less than on Patreon, each sub earns achievements and unlocks various perks on a channel.
Pros & cons
Some streamers feel uncomfortable when they need to ask for donations or subscriptions. Some people can’t afford to support their favorite streamer with a sub or Bits. Monetization through ads is a passive (to some extent) income source that requires a streamer neither to negotiate with advertisers nor directly ask the audience to donate.
Again, the Twitch ads feature is available only to Affiliates and Partners. It works on a CPM (cost per mille) basis—the more people have seen the ad, the more the revenue. There are two types of ads:
- Pre-rolls, or ads you see when entering a channel. It’s similar to pre-rolls on YouTube for those who don’t have Premium.
- Ad breaks, or ads that resemble typical TV ad breaks.
As for ad breaks, their placing is entirely up to you as the channel owner. However, if you want to disable pre-rolls, you need to run ad breaks during a stream regularly.
If you choose to, you can enable ad-free viewing for your subscribers as an added benefit. In this case, your ad revenue will be calculated based only on the number of non-subscribed viewer impressions.
The last but not least thing about Twitch ads is that you’ll only be able to withdraw money after reaching a minimum threshold of $100.
In contrast to Twitch ads, third-party ad networks are usually more flexible regarding eligibility criteria and minimum thresholds for withdrawal.
Let’s take StreamHERO as an example of such a network. There are no eligibility criteria, so any streamer can monetize their broadcasting with two main types of ads:
- Automatic display ads (you get paid depending on how many people have seen the ad banner)
- Offers (you get paid depending on how many people have done a targeted action, e.g. installed an app)
You can choose just one ad type or run both of them at the same time. The ad itself usually looks like a small banner that pops up in a screen area of your choice. Additionally, you can send an ad link into your chat and set up a banner below the broadcasting window.
The withdrawal threshold is much lower than that of Twitch: the minimum sum for withdrawal is $30.
Pros & cons
4. Affiliate programs & links
This monetization method has been well known outside the streaming industry for a long time. If you promote a particular product to your audience and people buy it using your custom link, you get a certain percentage of their spendings or a fixed reward.
One of the most popular programs is Amazon Associates. It allows streamers to promote any products of their choice, their PC builds, or Gear lists.
Pros & cons
The Bottom Line
The larger you grow your audience, the more monetization opportunities you’ll unlock: running brand campaigns, getting brand sponsorships, selling merchandise, and so on. It’s not that you can’t do it as an everyday user, but the chances to get any revenue increase with the audience. In this article, we described the methods which are suitable for the majority of Twitch streamers. We hope they’ll help you to get the maximum out of your channel.