By Jacqueline Renfrow
Amazon (NASDAQ:AMZN) will buy the video game streaming site Twitch for $970 million in cash, giving Amazon a leg up in the advertising pool shared by competitors such as Netflix and YouTube.
It was reported in May that Google (NASDAQ:GOOG) was in talks to acquire the company for $1 billion, but that deal never materialized, reported Re/code.
Twitch is a platform for making and discussing the recordings players make of their gaming experiences. The site, which is an offshoot of Justin.tv, had 50 million unique viewers in July. Justin.tv announced its coming shutdown earlier this month.
“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. But with Amazon’s support we’ll have the resources to bring you an even better Twitch,” Twitch CEO Emmett Shear wrote in his blog.
Amazon has been working to create a successful platform for streaming movies, TV shows and original series, all in efforts to compete with Netflix, which recently reported strong second quarter results as it moves past the 50 million subscribers mark.
Bringing a video game streaming site into the Amazon fold could launch the mega retailer into a new echelon of consumer engagement, namely the market of free user-generated content already utilized by websites such as YouTube. Video game footage is among the most popular content on YouTube, the world’s No. 1 video website, reported Reuters.
Twitch allows some popular broadcasters to participate in a “partner” program, meaning they share in some of the ad revenue generated by advertisements that display against their videos and sometimes charge for paid subscriptions. This partnership may fit well into the Amazon Prime platform, which already includes access to streaming content.
Amazon has made a big push into expansion and new ventures. Although sales in the second quarter increased by about 25 percent, the retailer posted a net loss of $126 million because of new research programs and project funding.
To date, Twitch has raised $35 million in venture funding.
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Jarrett Neil Ridlinghafer
Founder & CEO/CTO
Synapse Synergy Group, Inc.