Microsoft and Amazon might not, at first, seem like competitors outside of their cloud-based computing platforms. One is a software maker, the other the world's largest e-commerce site. But there's actually an area where they two are engaged in a major battle, and its one that Microsoft just made a big bet that paid off in a huge way.
Look, It's easy to dismiss video games as something people do to waste time. Sure, if your image of a gamer is a kid in his parent's basement, that makes sense. But some of those 'kids' are making big money, and the live streaming services from Microsoft and Amazon are a big part of the reason why. Mostly Amazon, really-- until now.
Microsoft's big bet.
That's because a week ago, Microsoft made a huge bet. That's when the company shelled out a reported $50 million to convince the most popular streamer, 'Ninja' to defect from Amazon's Twitch, over to Microsoft's fledgling streaming service, called Mixer.
If you're not into video games, most of that probably made no sense, but I suspect it was hard not to notice that Microsoft is paying someone $50 million to stream video gameplay. So, while you could be forgiven for not knowing who 'Ninja' is, or what Mixer, or Twitch, or even video game streaming is, you might want to start paying attention.
Because whether you're into video games or not, it's hard to deny that they're a big deal right now.
'Ninja' racked up a million subscribers to his channel in less than a week after switching to Mixer. That he did so after leaving Amazon's much, much larger platform, Twitch, tells you that Microsoft made a bet that is paying off big time.
It's actually an interesting lesson. Here's why:
Can you keep your audience?
Most of those one million subscribers took advantage of a two-month free subscription. That meant there was really no risk to sign up with Mixer, even if they were already a Twitch customer.
Microsoft was counting on 'Ninja' to jumpstart its audience for Mixer, which he did, but the real question is this-- how many of those subscribers will stick around when they have to start paying $5.99 a month?
How many of them are simply there because of the buzz, but don't actually care enough to actually pay money to subscribe. 'Ninja' had almost 14 million subscribers when he left Twitch, so certainly there's a lot of room to grow that audience, but it remains to see how much stickiness there is.
And that's really the lesson. Creating an audience is one thing. Creating an audience that sticks around, that you can leverage-- and monetize-- is another. That's the challenge of almost every entrepreneur (or business really).
Can you turn the thing that attracted an audience into the thing that makes you money?
Level-up or game over?
Microsoft has a pretty substantial gaming ecosystem already, with its Xbox consoles and games. It's counting on Mixer to help hold off competition from not only Amazon, but YouTube, and Google's upcoming Stadia gaming project.
The challenge will be to find ways to keep that audience and leverage it in a way that actually makes the company real money.
Right now, Microsoft is reaping the reward of a $50 million bet. It won't be long before we see whether all of those subscribers take Mixer to the next level, or whether it'll be game over.