The concept of live entertainment is as old as entertainment itself—so it seems natural that it would be taken online. Today, the livestreaming ecosystem has blossomed. While this format gained mainstream popularity in gaming with Twitch, today it expands far beyond gaming to encompass sports, music, education, and even e-commerce.
As livestreaming moves forward, the medium will continue to change how we consume entertainment, interact, and buy online. We believe livestreaming platforms will continue to grow beyond gaming and diversify into other verticals. Along the way, we believe that livestreaming will continue to become increasingly multimodal, as well as offer increased options for viewers to engage with streamers, interact offline, and express themselves online. At General Catalyst, we’re excited to support the next generation of entrepreneurs building the future of livestreaming.
How we got to today
The first “live streaming event” happened on the emergent web in 1995, when RealNetworks broadcasted the Mariners vs. Yankees game over live audio. To the chagrin of many New Yorkers, this seminal moment in internet history is marked by a 6-5 victory for the Seattle Mariners.
Ultimately, it was Twitch that thrust livestreaming into the internet mainstream. Originally founded in 2005 as justin.tv by Justin Kan, Emmett Shear, Michael Seibel, and Kyle Vogt, the site originated as a Big-Brother-like reality show focused on the founders’ lives, before allowing anyone to host their own streams in a variety of categories. As gaming gradually became one of the more popular categories on the platform, the team created the spinoff site Twitch.tv in 2011. Twitch grew rapidly, attracting over $35M in VC funding before being acquired by Amazon for $970M in 2014. That same year, Twitch commanded 1.8% of peak internet traffic in the US, trailing only Google, Netflix, and Apple.
Today, Twitch still commands an average of over 2 million concurrent users and over 20 billion hours of watch time in 2023. It has also expanded beyond gaming, with influencers specializing in categories such as sports, cooking, music, and other areas of entertainment. However, the platform’s growth has plateaued since 2021, with viewership remaining flat and declining slightly since then. Today, Twitch isn’t profitable—despite its immense scale.
Other platforms have launched streaming features as well and surpassed Twitch in watch time: YouTube’s YouTube gaming garnered 10 billion hours of watch time in 2020, and in 2021 Facebook’s Facebook gaming saw 4.5 billion hours of watch time. Platforms like TikTok and Instagram have taken streaming mobile, and platforms like Whatnot have even gone a step further, integrating live e-commerce and shopping into the livestreaming experience.
These expansions show that synchronous viewing is far from a gaming-only phenomena. Today, as we see it, livestreaming shapes not only how consumers play, but how consumers discover, buy, and learn. As the ecosystem develops, we believe livestreaming will become an ever bigger part of consumers’ everyday lives. At the same time, we see several areas that need improvement in order to overcome stagnation, better serve Gen-Z, and launch livestreaming into a new phase of growth.
Moving livestreaming forward
We see several areas that new livestreaming platforms can address to better build for a more digitally-native audience that craves more interactive experiences. Livestreaming’s current feature set for interactivity—including livechat and donations—help streamers take input, but the experience is still centered on the streamer broadcasting to an audience, rather than with, the audience. Furthermore, as these platforms largely focus on the synchronous experience, there are relatively few ways for viewers to engage after a stream is done, leading to potential periods of downtime in user engagement.
At General Catalyst, we believe that, much as in other areas of the consumer internet, livestreaming will be transformed to better suit the needs of the Gen-Z audience that will be these platforms’ primary users and influencers. We believe that the next generation of streaming platforms will be interactive, rather than passive, driving new business and product opportunities, and we are excited to partner with founders building the next generation of livestreaming.
Evolving the livestreaming business model
As livestreaming continues to advance, we believe that platforms will find new ways to evolve their business model to focus on niche verticals, expand the formats they offer, and create opportunities for offline monetization.
Moving beyond gaming
While livestreaming initially rose to mainstream popularity through gaming, we’re seeing an expansion across interests today, especially on TikTok and Instagram. Influencers already livestream any number of aspects of their lives, from their morning routines to house tours to meal prep. Peloton gained fame for their livestreamed workout classes. Even on Twitch, which is known for its gaming focus, non-gaming actually takes the throne in terms of popularity. In 2023, the ‘just chatting’ category, which, as the title suggests, comprises influencers talking to their audience, was by far the most watched category on the platform, with over 3 billion hours watched, nearly tripling the next highest game/category, Grand Theft Auto V.
At GC, we believe streaming has an allure beyond gaming and that future livestreaming platforms will cater to the specific needs of a niche vertical such as fitness, education, and cooking. We think these platforms will have the opportunity to own the streaming segment for these niches, and, as they grow, they’ll give rise to new generations of livestreaming influencers in verticals beyond gaming.
On livestreaming vertical, what we’re particularly interested in is sports. While live-broadcasted sports have existed since the radio, in our view the medium itself has not evolved since color TV and is in need of change. Only about 23% of Gen-Z watch sports, compared to 31% of baby boomers, 33% of Gen-X, and 42% of millennials. We believe, current methods of attracting sports audiences do not seem to work to the same degree with Gen-Z, and part of that solution may be to make the sports-viewing experience more social. As Gen-Z is the first digitally native generation, we believe that there is an opportunity for platforms to replicate the ‘couch watching’ experience digitally with sports, acting as a 2nd screen for the audience.
Multimodal livestreaming
Today, livestreaming already exists in both desktop (landscape) and mobile (portrait) modes. These streams are fairly siloed, with vertical streaming catering to those watching mobile content on vertical devices (i.e. phones) and horizontal streaming catering to a desktop audience. However, consumers consume streaming content in a myriad of locations. Even content that is originally created and consumed on desktop, for example, is often edited into clips by creators to be consumed on mobile platforms like TikTok or Instagram. In order to capture more consumer mindshare, we believe that the next major streaming platform will bridge the divide and offer optimizations for users to consume the same content stream in multiple formats.
We believe that this may go beyond current modalities such as mobile and desktop viewing to modalities like audio. For example, podcasting has continued to grow in the last few years, with 34% of Americans aged 12 and over saying they’ve listened to podcasts in the past week, up from 26% just 2 years earlier. In many ways, the long-form, conversational content of a podcast mirrors that of a livestream, and we think it’s possible that future forms of livestreaming incorporate modalities like audio-only as a part of a broader ecosystem.
Enduring offline businesses
Livestreaming may provide an intimate experience with the streamer in the hours the broadcast is playing, but that doesn’t mean the fun has to stop there. Indeed, we believe there is an opportunity to expand the post-stream experience for viewers into a business all its own.
Today we already see users package up moments from livestreaming to share among their other social channels and accounts. Platforms like medal.tv, for example, help players highlight their best gaming moments to share with others on their social platforms. These packets of content then become monetizable content on social platforms.
The offline experience expands beyond clips, however. Whatnot and Palm Street, for example, allow users to purchase what they see from livestreams, and Plutus allows creators to create a full community and platform for their audiences where they can play games, predict stream events, and further engage with the streamer itself. These platforms enhance the in-stream experience, but also provide options to explore and monetize while the stream is offline as well, allowing the creator to extend their reach beyond live hours.
The changes here have an opportunity to alter how streaming platforms generate revenue. Previously, platforms like Twitch were beholden to ad revenue, as well as a take rate on gifts audiences may give streamers. Adding offline interactions and opportunities for commerce may create new revenue streams for platforms.
We’re excited for further innovation supporting streamers and empowering them to build enduring businesses beyond the stream itself. When creators are successful, the platforms will benefit as well.
Changing how viewers and streamers engage
We see additional opportunity in interactivity, and we believe future livestreaming platforms will lean into this area to expand their reach.
Increasing audience interaction
We think engaging with an influencers’ audience is a time-tested way to increase audience engagement. Early experiments like Twitch Plays Pokemon, a viral fan-project which had Twitch viewers input their movements into a game of Pokemon all at once, peaked at 120,000 concurrent viewers, showing the potential scale of livestream audience engagement. Today, streamers can use extensions enabled by bits, a Twitch currency, to engage with their audience. Audience members pay bits to affect the stream—perhaps by asking the streamer a question or participating in a mini-game.
We imagine that the next generation of streaming platforms will lean into these engagement tools and allow creators to monetize their fan engagement. Today, streaming platforms allow viewers to notify streamers with a variety of gifts and donations, and liveshopping platforms allow audiences to buy directly from the streamer. These platforms, in addition to other creator platforms like Patreon, validate the audience willingness-to-pay to receive both goods and interaction time from streamers. We imagine future streaming options will expand on this concept and provide more tools for audiences to support and interact with their favorite influencers. For example, EloElo in India and Favorited in the US allow streamers to play minigames with their audience directly from the app itself. We believe apps like these represent an evolution in how audiences and streamers interact, and we’re excited to support players like these that deepen these traditionally one-sided relationships.
Digital identity expression
We believe that future live streaming platforms will allow not only streamers to express their virtual identities, but the audiences as well. Influencers are already increasingly using virtual identities, separate from their real ones. For example ‘VTubing,’ using a virtual avatar, has exploded in popularity over the past several years. In 2021, YouTube live reported 1.5 billion views for “vtubers,” the same year Twitch reported a 467% year-over-year increase in views for the genre of streamer. While vtubers are often associated with Japanese culture or anime, we feel the core element here is allowing users to express themselves more freely online.
Furthermore, we believe that the use of these digital identities will extend beyond just the streamers to the audiences. In gaming, roleplay, the act of assuming a character in a defined imaginary world, has become a dominant emergent behavior among the Gen-z audience. The most popular game on Roblox, for example, is Brookhaven, a simple town where users can go in and roleplay alongside their friends. It has over 500,000 players daily. In Grand Theft Auto, developers Rockstar acquired cvx.re, the developers of popular roleplaying servers on their games, showing the popularity of these platforms. As Gen-Z increasingly becomes the audience for these streams, we believe that these platforms may incorporate more of the viewers’ digital identities, creating a more community-driven streaming approach compared to the one-sided, parasocial relationships that can exist in streaming today.
The role of AI in viewer engagement
We believe that AI has the potential to fundamentally improve livestreaming across the engagement stack.
AI is already driving content discovery, with more than half of the content recommended to viewers on platforms like Facebook today being AI-recommended — and we think the potential for AI in viewer engagement doesn’t stop there. GenAI can supercharge avatar creation for Vtubers or audience members alike, democratizing access to this burgeoning space. Soon, we may even see digital avatars as streamers, with no need for a streamer behind the scenes. Even today, digital icons like Hatsune Miku validate the demand for such celebrities. These celebrities can hyper-personalize themselves to their audience, creating a unique experience for each viewer.
AI may also be able to improve personalization in livestreaming. For example, as AI inputs become increasingly multimodal, they may be able to better understand streams, and enhance the viewer experience by providing additional context based on what streamers do. Furthermore, as AI-native creation tools, such as suno.ai with music, simplify the content creation process, we feel that creators may be able to further personalize the content of the streams themselves.
At General Catalyst, we’re excited to support the livestreaming ecosystem as it grows beyond gaming. If you’re a founder building something exciting in the space, no matter where you are in the journey, we’d love to hear from you!
