Last month Amazon bought Twitch for a deal worth $1.1 billion, including $970 million in cash. It was a rather surprising move by Amazon as people were expecting Google to buy Twitch. However, it was a good move by Amazon and suggests a lot about Amazon’s future plans.
What is Twitch?
Twitch is a live video streaming platform which allows its users to stream their video games for other people to watch. In simple words, a service which lets people to watch other people play video games. It may feel odd, but if you consider other popular sports as shown on TV, it will be easy for you to get the concept.
Not many people know about Twitch other than gamers. Yet, the enormous gamer population is sufficient enough for the platform’s growth. According to a press release, more than 55 million unique visitors visited Twitch, along with 15 billion minutes of content produced by more than 1 million broadcasters in July alone. It is quite amazing because it comprehensively beats Facebook and Hulu in terms of traffic during peak hours.
Why is Amazon buying Twitch?
Back in 2012 Amazon developed an in-house game studio, which created several Facebook and mobile games. Moreover, if we look into Amazon’s pre-Twitch acquisition like Double Helix Games (developers of Killer Instinct) and hiring of Kim Swift (Portal fame designer), it would be evident that Amazon was planning to enter the gaming industry. Acquiring Twitch was the climax of Amazon’s preparations. Along with its extensive database of movies, books, and TV shows, Amazon is also one of the top video game vendors in the world, second only to Steam.
As for Twitch, they were looking for a partner that could help them with their exponential growth. They were looking for a company with a global infrastructure and reach. YouTube seemed to be the best fit, yet they chose Amazon. With Amazon Web Services (AWS), a live streaming platform that powers everything from concerts to sporting events that play on Amazon’s family of Fire devices could be the probable future of Twitch.
Is Twitch really worth $970 million?
The deal may seem a little overpriced to some tech gurus, but giants like Google and Amazon think otherwise. In May 2014, Google reportedly placed a $1 billion bid for Twitch, a little more than Amazon has offered. Yet, Twitch, for the following reasons turned down Google’s bid.
According to the Twitch CEO Emmett Shear, “One of the things that really stood out about Amazon was their approach to acquisitions. We will be a wholly owned subsidiary and I will remain CEO. They have a long term vision about how to create big opportunities in the future by investing today.”
On the other hand, he also thinks that Amazon’s existing relationship with the big players of the media would help them seal big partnership deals in the future, which they may find hard to seal on their own.
Wrap Up
For now, it seems a fair deal for everyone. The $1.1 billion acquisition may give us an innovative live video streaming platform. As for Twitch, not much is going to change in terms of management. They will be keeping the same office, employees and brand, while Amazon’s resources will help them shape a better experience.
