As a person who’s been knee deep in the trenches of Twitch for so long, I often forget there are people out there just getting into streaming for the first time. People who see a stream with pretty graphics and think to themselves “man, that shit’s hot! I wanna be that hot!” Those people know what they want, but have no idea where to start. Here’s a brief, but hopefully helpful, quicklook at stream graphics and how to use them.
An overlay can be a border around your webcam, or it can be a full 1080p thing taking up the whole frame. It’s basically a graphic (normally a transparent PNG file) that sits above your game capture window, and your webcam. It’s almost like your stream is wearing a mask, and you position things underneath it so everything lines up nicely (you wouldn’t wear a mask upside down… I mean… Unless you had upside down face or something).
You will need to be streaming using OBS or xSplit software, on PC or Mac. Within those programs it’s as simple as adding an image layer, and selecting your file(s). This is a handy video showing you how that’s done in OBS, and it’s more or less the same thing in xSplit.
No, there’s no way to apply it directly to your console stream. You will need to be using some sort of game capture device, which feeds your gameplay into OBS or xSplit on PC/Mac.
Yes, it does. I’m sorry.
No, only buy a PSD if you have access to Photoshop, and are comfortable amending text yourself using that program. You won’t be able to add the .PSD directly to OBS or xSplit. You will need to open the .PSD in Photoshop and then export your graphic as a transparent PNG.
They’re not, no. JPGs and GIFs also work on OBS or xSplit, but JPGs don’t allow transparency, and GIFs do, but normally at a much lower quality. PNGs (specificially PNG-24, since you didn’t ask) offer transparency with little or no drop in quality. They can be slightly bigger files as a result, but not significantly.