Wheelings & Dealings: Amazon's Newest Billion-Dollar Baby

By Steve Anderson August 25, 2014

For some time now, discussion had been flying hard and fast around just who, if anyone was going to land the online video streaming network Twitch, a network largely devoted to videos around video game play. While Google was, at last report, set to pick up the network for a hefty billion, the newest reports now suggest that plan was scrapped only recently, and Amazon stepped in instead, with a better offer to boot.

The reports now suggest that Amazon agreed to acquire Twitch for over $1 billion, with the deal potentially ready to be announced soon. Back last September, Twitch had raised fully $20 million from a set of investors ranging from Thrive Capital to Take-Two Interactive Software, and was often held up as an indicator of the growing popularity of video gaming as a sport, known as “e-sports.” Current reports also noted that a deal may not have been signed yet, but may be close to actually happening this time around.

So why would Amazon have an interest in picking up Twitch? Likely for many of the same reasons that Google would have wanted Twitch; Twitch is a major draw in terms of online viewership, putting up numbers just last March that showed it was personally accountable for 1.35 percent of all traffic online throughout the world. In February, meanwhile, Twitch was found to be the fourth largest source of all traffic in prime time, and Twitch viewers remained on the site for an average of 106 minutes per day. Containing around 50 million monthly active viewers and over 1.1 million broadcasters at last report alone, it's pretty easy to see why any streaming service—from Hulu to Netflix to Google and, yes, to Amazon—would take an interest in this.

Getting Twitch video under a streaming service's banner would represent a potentially huge groundswell of new support, new viewers, and even new potential revenue sources. What's more, that new traffic would be extremely focused—it would be there specifically for gaming and game-related content—so the resulting marketing could be highly specific, and thus highly valuable. It would certainly be the kind of thing that Amazon could make hay with; incorporating Twitch into Amazon Instant Video might be a great way to get more subscribers in, and provide the company with a needed source of cash. Amazon hasn't been shy about putting its money back into operations over the last few years, but profits haven't exactly been the greatest at the company. This could be a means to help generate spare cash to turn around for investors, keeping said investors involved in the operation and allowing Amazon more cash to funnel into its various expansion operations.

Only time will tell if this particular deal is the one that gets Twitch under a new banner, but certainly, Amazon could be a better home for Twitch than many of its alternatives. There are certainly plenty of possibilities that could be tied into something like this, and the ones that Amazon tries may be welcome—or reviled—by gamers, investors, and the competition alike.

Edited by Maurice Nagle

Contributing TechZone360 Writer

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