Twitch ramps up its crypto strategy with a digital currency promotion. Will more merchants follow suit?
Amazon-owned streaming platform Twitch appears to be ramping up its crypto strategy. The site, which focuses primarily on video game livestreaming, is now offering users a 10% subscription discount when paying with cryptocurrency through the platform’s payment processor, BitPay.
BitPay’s chief marketing officer, Bill Zielke, told Cointelegraph that out of the thousands of merchants the company works with, Twitch is the first major global brand to offer a crypto-based promotion. Zielke added:
“We are seeing more online merchants interested in using crypto as a promotional payment form, which is exciting since most marketing payment options are mainly reserved for alternative payments through PayPal. [...] Twitch is the first major merchant to jump on this trend.”
Is Twitch’s interest in crypto tied to gaming?
According to Zielke, it is Twitch that’s offering the 10% subscription discount, which is important to note because some may think the promotional offer comes from BitPay. The fact that Twitch itself is offering the promotion is quite surprising, as the streaming platform appears to have a love-hate relationship with crypto.
In March 2019, Twitch removed its Bitcoin (BTC) and Bitcoin Cash (BCH) payment options for subscriptions. A Reddit user reported the change, noting that Twitch suddenly removed BitPay as a payment processor. Another Reddit user pointed out that Twitch canceled all their crypto-based subscriptions during this time. Three months later, Twitch reenabled crypto payment options.
While Zielke was unable to comment on Twitch’s sudden change of heart toward crypto in 2019, he mentioned that Twitch clearly wants to attract more crypto users to the platform. “When a company as large as Twitch offers a cryptocurrency-based promotion for all its customers, this sends a clear message that they are serious about it,” he said.
Speculation would also lead some to believe that Twitch’s growing interest in crypto stems from the increasing popularity of blockchain-based games and the use of digital assets in virtual worlds. With this in mind, it’s important to point out that Twitch caters primarily to the gaming community. Recent statistics further show that over 16,000 games were played on Twitch at the beginning of July, which appears to be close to the all-time high for the platform.
Trip Hawkins, a gaming pioneer and independent board member for DMarket — a platform for blockchain-based games — told Cointelegraph that he believes crypto will steadily increase in importance over the coming years, notably as a theme in games featuring virtual goods economies and within other game-related services:
“Games are virtual worlds, and virtual worlds benefit from the trustworthiness of more currencies and reliable methods of payment. They also stand to benefit from the ownership and tracking mechanisms that crypto is known for. Hence, digital merchants will want to offer crypto as long as it is not too volatile an instrument (for that reason, we have seen it come and go a few times already).”
Hawkins further noted that another trend many livestreaming platforms are adopting is using crypto for tipping. In December 2019, mobile payments service MenaPay announced support for Twitch tipping using its MenaCash stablecoin. The decentralized internet browser Brave also supports tipping on both YouTube and Twitch.
The founder and CEO of DMarket, Vlad Panchenko, also told Cointelegraph that he believes Twitch is building a next-generation interactive platform, not only for gamers but also for other entertainment sectors such as the sports industry, increasing Twitch’s audience and overall engagement: “This is a perfect example of how gaming companies are predicting the future by re-positioning and re-structuring their offers with cryptocurrency.”
The end of HODLing?
Hawkins additionally pointed out that following the cryptocurrency market crash in March, crypto prices have recovered and even stabilized. As such, using crypto as a form of payment for online subscriptions may now be optimal. Echoing Hawkins, Zielke noted that while the cryptocurrency-based promotion offered by Twitch is a bold move, this demonstrates an even larger trend, with more merchants starting to seek and accept crypto-based payments.
According to Zielke, BitPay commissioned a study by Forrester Consulting to show the benefits merchants can receive when accepting crypto payments. Although the study has not yet been released, Zielke was able to share some findings:
“We found that accepting crypto delivers higher average order values, often 2–2.5 times higher. We also found that accepting crypto attracts new customer segments and lowers payments costs. Also, it’s often the case that half the cost of traditional pay methods accepting crypto nearly eliminates fraud-related chargebacks.”
Stephan Widmer, CEO of European furniture e-commerce site Beliani, told Cointelegraph that the company previously partnered with BitPay on a campaign where customers received 100 euros (currently $116 dollars) off purchases of 400 euros ($465) or more when they paid with crypto. He explained that the objective behind the promotion was to attract a new customer base while increasing sales from higher-value orders. According to Widmer, results from the campaign show average order values to be about two times higher compared with sales from credit cards.
Although these findings may indicate big strides for cryptocurrency adoption in the payments industry, many challenges still remain. For instance, crypto is still a foreign concept for many retailers, causing most to shy away from it. Also, the volatility associated with crypto can be problematic for merchants. Michelle O’Connor, vice president of marketing for digital payments platform Uphold, told Cointelegraph that there are still strides that need to be made in order for cryptocurrency payments to gain mainstream adoption. O’Connor said:
“When you look at the crypto industry and progress made over the past 6–12 months to jump the rails from speculation to mainstream adoption, it’s promising but there is still a ways to go and improvements to be made. When deciding how to invest in cryptocurrency, there are two camps, the hodlers and the consumers. Up until recently, there were very few easy ways for consumers to spend their crypto, or a hesitancy to spend because of the speculative nature and market volatility.”
Yet O’Connor noted that hesitancy toward spending crypto is starting to fade away, especially as the United States experiences a devaluation of the dollar. Moreover, the benefits associated with cryptocurrency payments are starting to be realized by both merchants and major credit card providers like Mastercard. “By removing the merchant fees, settlement times and risk of chargeback, businesses should all be looking at their current accepted form of payment and open up to the world of crypto,” O’Connor said.