☕ What is Caffeine? CP#7

The Coachella of Livestreaming

Welcome to the new Caffeine. We're live.

Caffeine is a social broadcasting (livestreaming) platform focusing on gaming, entertainment, and music content. Founded by an ex-Apple designer, Caffeine has raised almost $150 million dollars. 21st Century Fox invested $100 million. The rest came from Andreesen Horowitz and Greylock Partners. Much like Apple, Caffeine is focused on simplicity. The UI is uncluttered, and streaming to Caffeine requires one click with no additional software. Lachlan Murdoch sits on the board. Launched in 2016, but really coming out of stealth in 2019, let’s try to break down Caffeine’s place in the livestreaming space.


Positioning and Strategy

The livestreaming platform space is very competitive. Amazon-owned Twitch is firmly in first place. Then, we have Google-owned Youtube, Facebook Gaming, and Microsoft-owned Mixer. This is the red ocean Caffeine has to survive in. Thankfully, Caffeine is backed by another giant - Disney (through acq. of 21st Century Fox). Everyone has lots of cash to fight till the end. This is a war of giants to determine the future of television.

Caffeine has tried to differentiate itself from the hardcore gamer focused Twitch by building celebrity partnerships developing their own periodic programming. Caffeine has signed high profile exclusive livestreaming deals. The biggest one? Our boy Champagne Papi aka Drake who has signed multi-year exclusive to stream on his personal channel, and bring Ultimate Rap League to Caffeine. Cool? Yes. Livestream Interactive content native to streaming? ehh…

In addition Offset, Doja Cat, Juju Smith-Schuster, and LaMelo Ball have all signed Caffeine exclusive deals. Celebrity star power is a cool way to bring in new fans. But celebrities are busy. They can’t stream every day. So even if Caffeine brings in new viewers, they will slip through the cracks when Drake doesn’t stream for a month.

Caffeine is trying to become the Coachella of live-streaming. Low frequency, high star power, focus on artists (rather than gaming). The hope? When people come for Coachella, they fall in love with the local artists.

The key metric for a social video app is watch time. I watch Twitch everyday because my favorite streamer streams for 8 hours everyday. My watch time skyrockets. In contrast, I might only watch Caffeine when Drake streams for an hour once a week.

Therefore its not a surprise when we look at Caffeine’s numbers and compare them to Twitch. According to SimilarWeb, Caffeine is getting less than 0.05% of the views of Twitch. They don’t have enough popular regular streamers. Despite being in a buyers market with Ninja, Shroud, Corinna, Toast all leaving Twitch, Caffeine hasn’t made any other big moves.

Challenges

Caffeine’s simplicity comes at a (big) cost. On Twitch, streamers are able to add additional functionality and interactive features through extensions and plugins. In contrast, Caffeine’s interface is clean with no additional functionality. As a result, hardcore streamers are put off because they can’t do half the things they do on Twitch.

Similarly, the chat feels dead. Social broadcasting needs to feel social. Hiding viewer counts, slowing down chat, and modifying the chat feed for each individual viewer makes every stream feel dead. As if no one else is watching. Boring.

Finally, discoverability is an issue. Here is what a former Caffeine user said about this:

“Yeah, I find the lack of ability to browse content that I actually want to see to be disappointing. It doesn't even allow me to look only at creatives, or talkers, or gamers, but instead throws listings of everyone on and essentially, "Just pick one." It's a big turn off.”

- /u/lucgrigg

Opportunity

But there is a big opportunity. Caffeine has access to the Disney catalog. With the rise of apps like HMU, Squad, and Netflix Party, it is clear that ‘party viewing’ is the future. Caffeine has a distinct advantage here over Mixer and Facebook Gaming, who don’t have a large content catalog. Caffeine and Disney can go head to head with Twitch and Amazon Prime Video in enabling users to watch TV shows, movies, and videos together. Twitch recently launched watch parties. LospollosTV has been watching 90 day fiancé on Twitch and he has broken his own viewership records.

Caffeine should take this catalog and make it available to broadcasters to watch with friends. They can watch live on a public stream, or create private rooms and stream to a select group of friends in a more intimate setting.

Prediction

Caffeine becomes a party viewing layer on top of Disney+ in 3 years.


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