own3D.tv has officially announced it will cease operations effective Thursday and will be declaring bankruptcy, following speculation about the company’s ability to pay owed revenue shares to its content producers.
Citing “unexpected growth” in a competitive and capital intensive industry, the own3d.tv team wrote on their blog that they were unable to keep the organization profitable. Chief Operating Officer Oleg Kogut spoke on Live on 3 on Wednesday night, where he shed light on the factors which led to own3D.tv’s financial hardships.
Kogut explained that the technical demands of providing a full HD streaming service and the associated cost structure – though somewhat accounted for – quickly became too large of an expense for the company.
“[In 2010] If someone was able to set-up a 360p stream, he would be extremely proud of that. In 2012, if you are not streaming 720p full HD, no one is going to watch you,” said Kogut. “While the unit price of delivering traffic was going down, that actual amount of bandwidth consumed by someone watching the stream was growing much faster.”“The company had to work out another strategy for costs but we didn’t manage to execute it.”
Additionally, game stream audiences, Kogut said, are capable of sustaining high volume and are prone to repeated spikes in traffic which also required a higher quality server solution that was often shared with the likes of Netflix and other multinational corporations. For start-ups like own3D.tv, bandwidth expenses are an overwhelming hurdle to growth.
“The company had to work out another strategy for costs but we didn’t manage to execute it,” said Kogut.
Destined to lose
In a now-infamous January 17th post entitled “Own3D.tv – a beginner’s guide to being an asshole”, Steven “Destiny” Bonnell chronicled his difficulties in receiving the money that was owed to him by the popular streaming platform. On this subject, Kogut revealed that the terms of the signed contracts allowed own3D.tv “the right to delay payments to partners,” that there were numerous parties who were still owed money by own3D.tv, and that they will receive “as much as possible.”
“Unfortunately it’s not going to be 100% that’s paid out,” Kogut admitted.
Sadly for Destiny, it appears as though he will be among those who will not be receiving owed money. In his original post, Bonnell included chatlogs in which he admittedly violated his terms with own3D.tv by streaming on competitor Twitch.TV’s platform 12 days prior to the conclusion of his contract. In regards to this, Kogut was succinct, pointing to very strict but fair Austrian laws.
“If the people were in breach of contract with own3D.tv, it will just be voided,” he said.
It’s a one-horse race, and Twitch is winning
Perhaps the greatest consequence of own3D.tv is that it leaves Twitch.tv as the sole live streaming platform specifically tailored to gaming and e-sports. Competition within an industry naturally promotes growth and innovation for all parties involved – with the consumers or viewers as the true beneficiaries – but with no rival remaining, who will keep Twitch honest?
Marcus “djWHEAT” Graham, a Twitch employee, echoed these sentiments, remarking in reference to own3D.tv, “that site kept us on our toes.”
Oleg Kogut had two simple words of advice for djWHEAT and Twitch: “Don’t relax.”