Video Advertising by Twitch Influencers

We study the effectiveness of influencer marketing in the video game industry. To this end, we construct a novel dataset on video game streaming on Twitch.tv, the largest video game streaming platform in the world, by monitoring live streams every 10 minutes for eight months. Leveraging these high-frequency data, we isolate plausibly exogenous variation in streamers' daily schedules and use it to estimate the extent to which live streaming brings additional players into broadcasted games. We find that organic live streams only marginally increase the number of concurrent players in these games. We also find that sponsored streams solicited by game publishers are even less effective than organic streams, implying that sponsored streams generate, on average, negative return on investment (ROI). This result suggests that influencer promotions are less effective than previously thought. We then examine heterogeneous returns to streaming by estimating generalized random forests, and we find that sponsored streaming can significantly benefit games released by small publishers, inexpensive games, and “niche” games that strongly appeal to small groups of consumers. Therefore, despite the negative average ROI, influencer promotions may generate high returns when they promote games by lesser-known publishers or inform consumers about appealing game attributes