Amazon confirmed Monday that it has inked a deal to acquire Twitch Interactive, the three-year-old company that runs a popular videogame live-streaming service.
While earlier reports on Monday said Amazon was to pay more than $1 billion for Twitch, Amazon announced that it will buy the company for a bit less than that – about $970 million in cash. Amazon expects to close the deal in the second half of 2014.
Amazon swooped in to buy Twitch following reports in May that Google was poised to buy the live-streaming specialist for more than $1 billion. The Wall Street Journal and The Information reported earlier Monday that talks between Google and Twitch had fallen apart.
In making its announcement, Amazon noted that Twitch was home to more than 55 million unique visitors that combined to view more than 15 billion minutes of content in the month of July via Twitch’s network of 1 million-plus “broadcasters.”
Amazon, which sells games via its electronic retailing platform and via its new Fire TV box, including internally-developed titles such as Sev Zero (made by Amazon Game Studios), did not outline its near-term plans for Twitch, but said it plans to engage Twitch’s user base on how to move forward.
“Broadcasting and watching gameplay is a global phenomenon and Twitch has built a platform that brings together tens of millions of people who watch billions of minutes of games each month – from The International, to breaking the world record for Mario, to gaming conferences like E3. And, amazingly, Twitch is only three years old,” Jeff Bezos, founder and CEO of Amazon.com,” said in a 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.”
“Being part of Amazon will let us do even more for our community,” added Twitch CEO Emmett Shear. “We will be able to create tools and services faster than we could have independently. This change will mean great things for our community, and will let us bring Twitch to even more people around the world.”
“We’ve brought billions of hours of entertainment, laughter, joy and the occasional ragequit. I think we can all call that a pretty good start,” Twitch CEO Emmett Shear said in a letter to the company’s user base. “We chose Amazon because they believe in our community, they share our values and long-term vision, and they want to help us get there faster. We’re keeping most everything the same: our office, our employees, our brand, and most importantly our independence.”
Although Twitch and Amazon aren't providing a full view of their going-forward strategy, consumer tech analyst Jan Dawson outlined in this blog post why he thinks Amazon bought the company. “Twitch could be a very interesting addition to the Fire TV proposition, both from a broadcast and a viewing perspective, and Amazon could also build some of the same functionality into Kindle Fire tablets,” Dawson wrote, adding that Twitch also "appeals to a certain demographic which Amazon likely doesn’t reach very well today, and Twitch could help it reach that demographic more effectively and therefore cross-sell other Amazon products and services."
Will Richmond, president and founder of Broadband Directions LLC and the editor and publisher of VideoNuze, sees an even grander play on the horizon. "Longer-term, one way to think about the Twitch deal is that it could become for Amazon what YouTube now is for Google - the company's massive anchor in online video advertising," Richmond wrote in this blog post. "With Netflix thoroughly dominating the premium OTT market (albeit with Amazon trying hard to catch up), Amazon is making a bet that Twitch's combination of UGC, prosumer and premium content focused on the exploding esports gaming vertical could be its on-ramp into online video advertising."
Founded in 2011, Twitch has raised about $35 million. Most of its content is free, though partners have the ability to sell subscriptions to their gaming channels.