— Twitch (@Twitch) August 25, 2014
The deal comes in just shy of the $1 billion speculated last month when rumors circulated about a Google deal.
Amazon has not commented on the purchase. Twitch has more than 45 million users who each watch in excess of 100 minutes of video per day. The Twitch demographic—young males with substantial purchasing power—makes the esports stalwart an attractive addition to an established content distributor.
Amazon’s global reach, commerce platform, and device manufacturing businesses give Twitch the money and resources to expand its already loyal audience.
Meanwhile, the Twitch purchase stands to boost Amazon’s trajectory into the media space even further.
From the device standpoint, the Seattle company offers a full range of mobile devices, including a recently launched smartphone. Fire TV, one of the company’s big bets, is a peripheral that streams content to the home television set in the form of movies, TV, videos, and games. Twitch adds to Amazon’s arsenal of differentiated content assets that it offers Fire users—and maybe even entice a gaming audience to purchase games from the Fire TV app store.
It would make sense for Amazon to select some Twitch content as an incentive to join Amazon Prime, which offers Fire TV subscribers exclusive shows and apps. The deal also would allow Amazon the ability to offer select shows on its new Video Shorts platform with ad sponsorships and sell a full slate via its global commerce platform. In that space, Amazon competes primarily with Apple and its content/commerce/hardware ecosystem—and, to a lesser degree, with Google. The deal puts Amazon in the position to take on YouTube as a hub for user-generated gaming video.
The deal is decidedly a blow to Google and its media growth. The search giant’s strategy in the area of premium content has moved in fits and starts, and a Twitch purchase would have been a smart purchase after its Android TV program launched at the June I/O conference.
Update: The purchase price is a reported $970 million.
Illustration by Jason Reed