Executive Summary:
Mixer, initially launched as Beam, was a live streaming platform that enabled content creators to broadcast themselves in video format.
Mixer shut down because of intensive competition, high cost of maintaining the product, lack of community building, employee turnover, technical issues, as well as Microsoft shifting its focus towards other products.
What Was Mixer?
Mixer, formerly known as Beam, was a video live streaming platform that allowed creators to broadcast and host a live video feed as well as engage in chat rooms.
The streamer would then communicate with his or her viewers in real-time, either by reacting to their commentary or posting in the chat room.
Mixer primarily focused on hosting game-related live content. However, there was also a variety of other content being published. Categories included music, sports, and even cooking, amongst others.
Content creators could then be supported through donations as well as by paying a monthly subscription to access their content.
From the viewer’s perspective, using Mixer was as straightforward as it gets. First, you had to either visit the company’s website or download any of its mobile apps (available on Android and iOS devices).
After creating an account, users were presented with a variety of streaming options to choose from. You would then simply pick the one that’s most appealing and start consuming and engaging with the content.
Likewise, if you were a creator, you simply needed to download a separate app (called Mixer Create) to broadcast on your device. Given that Mixer was owned by Microsoft, its app came already pre-installed on Xbox devices.
Unfortunately, Mixer was eventually shut down in June 2020. We’ll explore how it came to be and the reasons for its failure in the following chapters.
What Happened To Mixer?
Mixer, formerly headquartered in Seattle, Washington, was founded in 2014 by Matthew Salsamendi and James Boehm.
Despite the fact that Salsamendi and Boehm were only 16 and 18 years old when they launched the platform, it was actually not the first business they had worked on together. Let’s rewind three years back in time.
In 2011, a 13-year-old Salsamendi, who lived in Ft. Lauderdale, Florida at the time, began hosting Minecraft servers for friends and other gamers as a fun pastime of his.
Users would send him $10.00 via PayPal to have Salsamendi set up a gaming server for them. Having your own dedicated server allows you to modify the game to your liking and give certain permissions to other players.
Eventually, the gaming server took on a life of his own and began spreading simply due to word of mouth. A few hundred miles up north, in Atlanta, Georgia, a kid named James Boehm started to take notice.
Boehm, who was 15 at the time, saw an ad for Salsamendi’s hosting service and decided to reach out to him. The two eventually became friends and, at one point, Boehm decided to ask Salsamendi whether he could join his growing hosting business as a second co-founder, to which the latter agreed.
Over the course of the next few years, they grew the business to a valuation of around $5 million – all while still being in high school. Unfortunately, the demand for the business ultimately outgrew their own setup.
In fact, Salsamendi had placed a bunch of computers in the basement of his parents’ house. Eventually, these PCs simply couldn’t provide the bandwidth that was required to host that many players.
On top of that, Salsamendi was regularly missing classes and had a hard time keeping up with his school work. As a result, he decided to drop out of high school and incorporate a business named MCProHosting (which would use proper data centers to host the games).
Despite the business continuously growing, the duo soon decided to pivot. Being avid gamers themselves, they saw first-hand how live video streaming was taking over the world of gaming. Around the same time, in August 2014, Twitch had just sold to Amazon for $970 million in cash, confirming that live streaming was here to stay for good.
Towards the end of 2014, after months of hard work, they unveiled an alpha version to the public. What separated it from existing solutions was its technical superiority. It was built on the FTL (Faster Than Light) streaming protocol, which led to comparatively lower latency speeds.
Over time, more and more users began to join the platform. Eventually, close to 20,000 people were visiting it every month. Having that confirmation made them double down on the product. Eventually, in January 2016, they unveiled a platform called Beam to the public.
Just weeks after the launch, they were able to secure their first outside round of funding. Ore Ventures and Courtside Ventures invested $420,000 in the company. A few days later, they were accepted into the renowned TechStars accelerator, which netted them another $20,000 alongside some major publicity.
In March, the founders raised a convertible note worth $100,000. Their hot streak continued, when in May, they won TechCrunch’s Disrupt NY Startup Battlefield. Another month later, Boehm and Salsamendi were accepted as Thiel Fellows, which granted them another $100,000.
However, the biggest news bomb came in August 2016. Software giant Microsoft announced that it acquired the young startup for an undisclosed sum. Boehm and Salsamendi joined the company as full-time employees.
Right after the acquisition, Microsoft also began to embed Beam into its existing suite of products. For instance, Beam came pre-installed on every new Xbox device as well as being heavily promoted on Windows 10.
In May 2017, Microsoft and the team decided to rebrand Beam into Mixer. The name change was meant to highlight the way the service brings people together. Alongside the announcement, Microsoft also launched the Mixer NYC Studio, a digital production studio that would stream its own content on the platform.
To support its creators and attract more of them to join the platform, Mixer introduced multiple features (in January 2018) that allowed them to earn money streaming. In this specific case, it launched a tipping feature as well as the ability for streamers to sell games (that were available in the Microsoft store).
Then, in November, Microsoft doubled down on its creator support by launching Skills and Sparks. Skills, for example, enabled creators to sell stickers, GIFs, and other screen effects that could be used in chats.
However, these features were often already existing on its main competitor’s platform Twitch. As a result, Mixer had a tough time picking up market share against not only Twitch but also YouTube Gaming and Facebook Gaming.
In June 2019, Mixer even had to lay off some employees from its original programming unit that was producing content out of its NYC studio. A month later, Microsoft removed the Mixer Create app, which enabled creators to stream from their phones, yet never really picked up steam.
To upend the reign of Twitch, Microsoft finally deiced to bring out the big guns. On August 1st, 2019, Mixer announced that it had signed livestreaming star Tyler “Ninja” Blevins to its platform. Allegedly, the company spent around $30 million to sign the streaming star to an exclusive deal.
Within 24 hours, his channel had already amassed almost 400,000 followers. Mixer doubled down on that strategy in October by signing Michael “Shroud” Grzesiek, who had 7 million followers on Twitch, to an exclusive deal as well (which allegedly netted him $10 million).
Yet, not everything was always going according to plan. That same month Mixer signed on Shroud, both Boehm and Salsamendi announced their departure from the company.
Over the coming weeks, Mixer signed a variety of other creators to exclusive deals, including professional Fortnite player FaZe Ewok or KingGothalion.
Despite investing tens of millions of dollars into exclusive deals, Mixer’s market share remained flatlined. The number of watched hours, a common metric in the industry, increased less than 2 percent from January 2019 to 2020.
In February 2020, a townhall speech of newly enlisted manager Shilpa Yadla surfaced who told staff that she wouldn’t accept “negativity” and that she wasn’t there to “sympathize with anybody.” Allegedly, morale at the company was at an all-time low. Furthermore, budget cuts led to a reduction of 25 percent of the firm’s workforce.
Although the company continued to add new features and even handed out $100 bonuses to all creators on its platform, it wasn’t able to grow much. Even the coronavirus pandemic, which propelled dozens of companies like Discord or Zoom to new heights, didn’t do much for it.
It, therefore, only came as a little surprise when on June 22nd, 2020, Microsoft announced that it would shut down Mixer exactly a month later on July 22nd. Additionally, Microsoft had struck a deal with Facebook to redirect its existing traffic and users to its own streaming platform.
In fact, Facebook offered every Mixer streamer $2,500 to join its platform. With regards to its most famous celebrity, Ninja, it even offered twice as much as Mixer had initially paid him ($60 million). While Ninja eventually ended up on YouTube Gaming, Shroud did end up rejoining Twitch.
Unfortunately, not everyone was that well off. Mixer had not even notified any of its streamers, some of which were making a living off of the platform they were bound to, about its intentions to shut down. This left many with no income almost overnight.
Mixer officially shut down on July 22nd, 2020. Data in the subsequent quarters revealed that the majority of streamers eventually migrated towards Twitch, which was able to grow its market share from around 70 percent to over 90 percent.
Why Did Mixer Shut Down?
Mixer shut down because of immense competition, high cost of maintaining the product, lack of community building, employee turnover, technical issues, as well as Microsoft shifting its focus towards other products.
Let’s take a look at each of the reasons for its failure in the section below.
Competition
The main reason why Mixer was shut down was its inability to catch up to the existing and well-established competition.
When Boehm and Salsamendi first conceived of Mixer, Twitch was already an established platform that had just sold to Amazon for hundreds of millions.
By the time Microsoft took over, Twitch’s market share was above 70 percent. On top of that, Mixer was also competing against Google and Facebook.
In the case of Google (i.e., YouTube Gaming), its platform had over a billion users who were already visiting it to consume video-based content.
Similarly, Facebook could integrate its livestreaming offering directly and natively into its well-frequented platform. As such, it would only be a few clicks away.
As such, Microsoft did not compete against some no-name startups but other big tech companies which themself could commit billions of dollars to carry out this battle.
On top of that, content creators on either platform were often bound by exclusivity deals and therefore weren’t able to seamlessly switch between them.
Since Mixer could be seen as an online marketplace, it was crucial for the platform to build up a meaningful supply of content creators, which in turn would attract more viewership.
As such, moving from one platform to another would be an extremely risky undergoing for content creators as they would basically have to start from scratch.
Lack Of Community
Apart from intense competition, Mixer also failed to cultivate its own talent pool and, as such, build a meaningful community on top of its platform.
Microsoft often marketed Mixer as a technologically advanced version of Twitch and YouTube Gaming, yet wasn’t able to showcase how viewers could engage in a community of like-minded individuals.
If users would’ve felt being part of a community, then they likely would’ve brought over their friends and other people in their social circle. This, in the end, is what organic growth is all about.
Mixer’s best chance was to become a place for unknown creators that weren’t able cut through the noise on more competitive platforms like Twitch.
Those creators could have potentially built loyal followings on Mixer, which in turn would’ve brought on new viewers, and vice versa.
Apart from gaming, Microsoft should potentially have focused its efforts on other verticals such as cooking or music. By counter-positioning itself against the competition, it could have become the de-facto place for a certain set of people to hang out virtually.
Messaging platform Discord successfully pulled this off in the past. While it initially began as a chat application for gamers, it has since used its popularity to expand into other verticals.
Employee Morale & Turnover
Another major issue at the company was the consistent employee turnover that had been taking place throughout the years.
Most notably, Mixer’s founders (as well as some experienced executives) left the company within a week in October 2019. Leaving the firm within one week apart normally would indicate that they waited until their shares from the acquisition were fully vested and took the first opportunity to depart.
Furthermore, research shows that founder-led companies often outperform the ones that are being managed by outside hires. That is because founders tend to be more passionate and knowledgeable about the product, user, industry, as well as the problems they’re solving.
That passion then inevitably trickles down to the lowest of hierarchy levels if done correctly. Given that both Boehm and Salsamendi weren’t even allowed to legally drink alcohol when they sold to Microsoft made it tougher for them to take on these positions.
As a result, Microsoft placed its own managers to lead the business. This often led to culture clashes between Mixer’s existing employees and the new hires.
For example, Mixer employees saw the growth of the community as the main objective while the Microsoft managers cared more about the bottom line. Additionally, many of these external hires did not possess any or very little experience in the gaming industry.
Last but not least, instances of racist behavior were another reason for the low morale. The day after Microsoft announced the shutdown, Milan Lee, who worked at Mixer from 2017 to 2019, issued multiple tweets that highlighted Microsoft’s inability to address racist behavior by its managers.
Lee’s former manager, in one particular instances, used slavery as an analogy to explain Mixer’s relationship with its partners. Although Lee voiced out his objection to that analogy, his manager simply told him to “work on himself.” Additionally, Microsoft’s HR department ignored any complaints he issued.
In the end, employees were not only being laid off but were simply not motivated anymore to work at the company.
Technical Issues
For years, Mixer’s platform was plagued with various technical issues which negatively affected the user experience.
For example, streams would regularly break and were therefore not viewable. Even Mixer as a whole experienced multiple platform-wide outages.
Instead of fixing these problems, Mixer’s product teams added to the platform’s technical debt by introducing flashy features that they thought its users wanted.
Although Mixer’s technology was considered to be superior even to this date (in particular its low latency), not fixing its most nagging bugs ended up turning users away.
Cost
Let’s be real: operating a livestreaming service is a costly undergoing. Amazon likely spends tens of millions of dollars every month to be able to host videos on Twitch.
Mixer, although it had significantly less traffic, was certainly no exception. While Microsoft can probably access bandwidth at much lower cost due to its ownership of Azure (much like Amazon and AWS), it certainly won’t be cheap.
On top of that, it spent an absurd amount of money to sign on well-known streamers, which didn’t lead to a significant addition in viewership.
As a public company, Microsoft cannot afford to operate a loss-making business for multiple years as it would diminish investor interest and upset existing shareholders. This, in turn, could negatively affect its share price.
Overall, the closure did demonstrate Microsoft’s commitment toward not chasing good money after bad, allowing it to invest into higher growth opportunities – the last topic of this article.
Strategic Shift Towards Other Products
Last but not least, Microsoft also shut down Mixer to focus its existing resources on other products, namely the Xbox One, its newest console, as well as its game streaming service xCloud.
For instance, xCloud was being integrated into Facebook Gaming, the platform that Mixer now redirects to.
Given that the game streaming industry is still up for grabs, with Google’s Stadia being the only significant competitor at the time (Stadia has since been shut down), it made sense to double down on a product category that didn’t have that level of competition Mixer faced.
