• by Alex Weprin , August 21, 2018

Amazon’s live-streaming video service Twitch is looking to enhance its advertising business, and is making a significant change to its business model to do so.

The company said Monday that members of its premium service, Twitch Prime, will no longer receive universal ad-free viewing of videos, and instead will be shifted to an ad-supported model. Current monthly members will still have ad-free viewing until October 15, while annual members will still have ad-free viewing until their membership renews. 

The company says it's making the move in part because “advertising is an important source of support for the creators who make Twitch possible."

While Twitch is shifting more users to ad-supported tiers, it is not abandoning ad-free tiers altogether. The Twitch Turbo tier will remain ad-free, while Twitch Prime subscribers will still be able to select certain channels to watch ad-free.

Twitch has become Amazon’s front line for expanding its in-house advertising business, and building out a potential competitor to Google-owned YouTube.

On the advertising front, Twitch is said to be targeting $1 billion in ad sales for 2018. That remains quite small compared to YouTube, which most analysts believe has—at minimum—$4 billion in annual revenue (some place it as high as $15 billion annually). Nonetheless, $1 billion in ad revenue would be a notable achievement for Twitch.

On the content side, Twitch’s original mission was to allow gamers to play their favorite games, and let viewers follow along, comment and support them. The service still has gaming at its center, but it has expanded to entertainment, news and other types of content as well, much of it live-streamed.

Last week, Bloomberg reported that Twitch has approached a number of top YouTube creators—including some that don’t produce any gaming content—and offered them lucrative deals to leave that platform and decamp to Twitch.

Bloomberg reported that the offer was met with skepticism, owing largely to YouTube’s massive platform. As Twitch more fully embraces advertising, and continues to grow, it is possible that some of those minds will change over time.