Twitch definitely knows this because the company has recently announced that they have made some changes and upgrades to its Uploads Open Beta. The beta was originally announced at TwitchCon which basically put Twitch on par with YouTube with regards to certain features, namely the ability to upload pre-recorded videos onto the platform.
In the latest announcement, Twitch revealed some upgrades that they have made to the open beta since it launched, such as adding support for more file types. This includes .MOV, .AVI and .FLV files encoded in H264 in addition to .MP4 videos. Twitch has also improved upon the search algorithms by increasing the length of tags.
They also announced that there were additional features that they are looking at, such as more formatting options. Of course YouTube is still the reigning platform for uploaded videos, but it seems that with these improvements, Twitch will be taking the fight to them.