Amazon's (AMZN -2.56%) Twitch is still the largest video game streaming platform in the world, but Microsoft's (MSFT -1.27%) Mixer is quickly gaining ground, according to Streamlabs and Newzoo's fourth-quarter numbers.

Total hours watched on Mixer rose 33% annually to 82.5 million, while total hours streamed surged 269% to 28.4 million. Its number of unique channels grew 136% to 3.6 million, as its average number of concurrent viewers rose 34% to 37,584.

A gamer streams a PC game.

Image source: Getty Images.

During the same period, Twitch's total hours watched dipped 1% to 2.3 billion as its total hours streamed fell 4% to 82.7 million. Its number of unique channels fell 22% to 3.7 million, as its average number of concurrent viewers dipped 1% to 1.05 million.

Twitch's decline also coincides with the growth of Facebook (META -4.13%) Gaming and Alphabet's (GOOG -1.10%) (GOOGL -1.23%) YouTube Gaming Live. However, Mixer -- which declared war on Twitch by poaching its top streamer, Ninja, last year -- is arguably the biggest direct threat to Amazon's game streaming platform.

Why is Mixer a bigger threat than Facebook and YouTube?

At first glance, Mixer doesn't seem like a major threat to Twitch or YouTube Gaming Live. Mixer controlled just 2.7% of the market in terms of hours watched in 2019, compared to Twitch's 75.1% share and YouTube's 22.1% share.

A young woman streams a PC game.

Image source: Getty Images.

However, Microsoft has three distinct strengths. First, it's willing to throw millions of dollars at top streamers like Tyler "Ninja" Blevins and Michael "Shroud" Grzesiek, who both left Twitch for Mixer over the past year. Mixer's contract with Ninja is reportedly worth up to $50 million.

Second, Microsoft owns Windows 10 and the Xbox One. Microsoft streamlines the process for streaming video games from those platforms with a Microsoft account -- which is arguably a less cumbersome process than streaming on Twitch, YouTube, and Facebook.

Microsoft's upcoming cloud gaming platform, xCloud, will also likely stream content to Mixer. Google's Stadia still doesn't stream games to YouTube yet, and Facebook only took a few baby steps into the cloud gaming market with its takeover of PlayGiga last year.

Lastly, Mixer only focuses on video game streams, while Facebook and YouTube provide a wider range of streaming video content. All three platforms threaten Twitch's growth to some degree, but Mixer's focus, deep pockets, and sticky gaming ecosystem could pull streamers and viewers away from Amazon.

What does the streaming market mean for Microsoft and Amazon?

Mixer and Twitch both generate revenue by selling channel subscriptions and letting users tip viewers by buying virtual "embers" and "bits", respectively.

Neither company discloses how much revenue the platforms generate, but SuperData estimates that Twitch generated $1.5 billion in gaming video content (GCV) revenue in 2019 -- which equals just 0.5% of Amazon's total revenue. However, Twitch is also part of Amazon's broader push into video games with first-party games like New World, as well as part of the streaming video ecosystem that locks users into its Prime subscriptions.

Mixer likely only accounts for a sliver of Microsoft's total gaming revenue, which accounted for 8% of its top line in the first half of fiscal 2020. However, Mixer should still be considered an essential part of Microsoft's broader gaming ecosystem -- which includes Xbox Live, Xbox Game Pass, xCloud, and the Microsoft Store on PCs. Connecting all those dots would expand Microsoft's gaming presence beyond Xbox gaming consoles.

The bottom line

Mixer and Twitch aren't crucial growth engines for Microsoft and Amazon, but they're long-term ecosystem plays that could shape their futures in the gaming market. Amazon should keep a close eye on Mixer's growth and its aggressive poaching strategies. If it grows complacent with Twitch, it could lose more viewers to Mixer, Facebook, and YouTube -- which are all eager to claim the gaming crown.