Despite reports on Twitch’s talks with Google all summer, the gaming company was recently acquired by Amazon for a whopping $970 million plus stock options. Twitch, a community that enables Xbox and Playstation users to upload and view gameplay online for free, is a highly trafficked source with potential for effective, targeted advertising.
While a Google partnership seemed completely logical (Google owns YouTube, YouTube owns gamers…) some are curious what plans Amazon has for the gaming site. Variety provided Amazon CEO Jeff Bezos’s statement: “Like Twitch, we obsess over customers and like to think differently, and we look forward to learning from them and helping them move even faster to build new services for the gaming community.”
Gaming and computer blog <re/code> suggests the motives for Amazon include a built-in, engaged video audience and a media company that’s found a creative means of raking in the dough. While Amazon is “likely spending more than a billion dollars a year on its video content,” Twitch is creating quality videos for free.
The site makes its money on a combination of subscriptions and advertising; of the two, Twitch’s revenue from subscriptions “will have overtaken advertising by this time next year.” Viewers reportedly purchase subscriptions as an act of patronage to support fellow gamers – the sense of community on the site is not only friendly, but financially beneficial.
Amazon’s acquisition of Twitch also makes sense in light of Amazon’s move toward content creation and hosting in recent years. As a business partner, Twitch provides Amazon with a content source already supplying advertising revenue. Considering the new release of the Amazon Fire phone and media player, the free popular content generated on Twitch could be a boon for the online retail juggernaut. A letter from Twitch CEO Emmett Shear addressed the company’s acquisition, which is providing Amazon with the building blocks for a branded YouTube of its own.
by Maggie Altergott