Let's start with a hypothetical scenario ...
It's Aug. 22 and Middle-earth: Shadow of Warhas just launched. Joe Streamer on Twitch got the game a few days ago from Warner Bros. Interactive Entertainment, and he's finally able to start sharing it with his 10,000 followers.
Joe Streamer also sells Shadow of Warthrough his Twitch page, compliments of a new feature the streaming service is set to offer. For every copy he sells via Twitch, he'll pocket 5 percent of that money himself.
SEE ALSO:Blizzard and Twitch just had the most amazing 'Overwatch' GIF exchangeHow enthusiastic do you think Joe Streamer will be when he talks about Middle-earth: Shadow of War? Whether or not Joe Streamer is an honest dude, it's the potential for dishonesty that counts here.
This is just one of the sticky problems Twitch could soon find itself facing as it starts letting streamers sell the games they're playing.
Twitch's partnered streamers -- which is to say, streamers that have monetized their accounts -- will have the ability to opt into selling whichever game they're streaming directly from their profile page. For any sales made there, 70 percent goes to the game's publisher and 5 percent goes to the streamer (the rest goes to Twitch).
The numbers themselves aren't problematic. It's common for platform holders like Apple (in the App Store) or Valve (in Steam) to take a 30 percent cut of each sale. Twitch appears to be carving out 5 percent of its own cut for streamers.
The problem -- or, more precisely, the potentialfor problems -- is how all of this looks from the outside.
Streamers benefit directly when someone buys whichever game they're streaming. This is a quantifiable benefit: based on the numbers and details Twitch has provided, every $60 game sold amounts to $3 in the streamer's pocket.
Whether or not there's disclosure near the purchasing link on the Twitch page -- which is a whole other issue -- the new system still creates financial incentive for streamers to be just a little bit kinder about the things they're playing. They become, for all intents and purposes, salespeople.
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It's a move that stands in stark contrast to Twitch's stated mission of letting streamers share games "authentically with friends and fans."
Twitch contends that its partnered broadcasters -- who put in work to get to the point of monetizing their channels -- put too much at risk when they deceive their viewers.
"Streamers build a following by building trust with their viewers, especially those who have amassed a large enough community to attain Partnership status," a spokesperson wrote in an email. "The short term benefit of deceiving their community by praising a game they know doesn't deserve it, is not worth the long term risk to their reputation. There are also enough good games for them to sincerely hype. "
Even still, it's the potentialfor wrongdoing that creates problems. And that's where questions arise about disclosure.
In the documentation that Twitch has provided so far, there is no mention of disclosure requirements for streamers earning income from game sales. The closest we get is an explainer laying out how streamers can sign up. Those that opt in need to first accept an amended user agreement.
The text of that agreement isn't posted online for public consumption, however. And nowhere in the publicly available documentation for Twitch-based game revenues is there any mention of how disclosure requirements will work with the new system in place.
(Here's the rundown of the new service for consumers, and here's the one for publishers and streamers.)
Now, Twitch doeshave disclosure rules already ... sort of. A 2014 post on the site from SVP of Marketing Matthew DiPietro stresses the importance of "transparency in sponsored content and promotion."
The post addresses the specifics of how sponsored content on Twitch is marked, and advises all broadcasters to adhere to FTC guidelines when managing their sponsor relationships. You can (and should, if you like watching Twitch streams) give it a read right here.
The new service raises questions
There's just one problem: the rules laid out in that post apply specifically to Twitch-driven campaigns. Beyond recommending an adherence to FTC regulations, the site is largely hands off when it comes to telling streamers how they should or shouldn't disclose on their own streams.
That might have worked in the past, but once again: the new service raises questions. With Twitch and streamers both standing to earn revenue from game sales on the site, a blog post from 2014 explaining how sponsored content works -- and merely recommending an adherence to existing rules -- doesn't feel like it's enough anymore.
We've reached out to Twitch for clarification on a few points. A spokesperson already passed along the sponsored content blog post linked above.
We've also asked to see the newly amended portions of the partner agreement, as well as any projections Twitch might have regarding what the in-channel sales expectations are.
In other words: we're looking to glean a better understanding of what partners are agreeing to when they sign up to earn revenue from games sales on their channels. We're also trying to get a better sense of how Twitch views this new addition to its business as an income opportunity.
We're told that most of the commerce team at Twitch is in transit to San Francisco right now, to attend the annual Game Developer's Conference this week. Don't expect to see the projections we asked for, however; per a spokesperson, Twitch does not disclose internal financial projections.
We did, however, receive some clarification from Twitch's legal department as to how the company will deal with publishers/game developers and streamers. The statement:
Our process is, and will be, transparent:
Game Developers - Although we will not disclose negotiated arrangements with game developers (as well as any specific conversations), we will be posting our standard terms that will govern the distribution and sale of games and in-game items through our commerce program. The set of terms that will govern that arrangement will live as an exhibit to our Developer Agreement found under our Legal terms section. Such terms will be presented when we finalize our plans to onboard developers via the portal and present a click-thru for execution of such terms (April/May 2017).
Broadcasters - when a broadcaster is enrolled in our program to receive revenue from the sale of games or in game items via our commerce offering, Twitch will display a message to the viewer informing them that the broadcaster will receive a portion of the revenue from any sale. Specific message is as follows: "A portion of the purchase price will be shared with [BROADCASTER]" If a broadcaster is not enrolled in our program to earn revenue from sales of games, no message will appear.
The key bit here is the section related to broadcasters. When you're watching a Twitch stream from a broadcaster hawking games on his or her channel, you'll also see a message from Twitch disclosing that fact.
Asked how the message will be displayed on the channel -- the Federal Trade Commission has rules for this -- a Twitch spokesperson replied: "The message will be prominent and, at a minimum, located adjacent to the button that triggers the purchase experience."
UPDATEDFeb. 27 8:47 p.m. ET with additional details from Twitch's legal team.
UPDATEDFeb. 27 9:01 p.m. ET with Twitch spokesperson comment on how disclosure notices will be displayed.
TopicsEsportsGamingTwitch
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