Big news overnight from Amazon, which has bought streaming service Twitch for a cool $970m. Yes – that’s right – Amazon. Twitch had multiple suitors, but it seems that in the end Twitch went for the one we least expected. (We were all expecting Google).
So why did it happen? For Twitch, it appears that it made the conscious choice of Amazon over Google – presumably because the staff didn’t want to be playing second-fiddle to YouTube in a Google-owned company… but why would Amazon buy Twitch? Here’s six reasons that might have led Jeff Bezos into getting out the chequebook.
1) Buy more influence for Amazon in gaming
Amazon is a company that seems increasingly interested in gaming. In 2012 the company founded its own game development studio to create exclusive titles for its Kindle Fire tablet. Earlier this year, when it unveiled the Amazon Fire TV (which we’re still waiting for on this side of the Atlantic), it was revealed that gaming would play a major role on the platform, with Amazon releasing an Xbox-style controller and suggestions that the streaming box has enough horsepower inside to pump out some graphics and handle some fairly complex games. The company has not just created a bare-minimum streaming stick like Google’s Chromecast.
So in a sense, perhaps Amazon getting more involved in gaming isn’t at all surprising. Twitch in particular not only has a huge community of users, but is also a built in feature on the PS4 and Xbox One, and is viewed as essential by many players. By controlling the streaming output from the major consoles, Amazon suddenly has more leverage with the gaming titans that are Microsoft and Sony.
2) Sell games to people who are watching
It seems strange to think about it, but remember when Amazon was just a website that sold stuff? Shopping is still a major part of Amazon’s business so the prospect of having a “Buy Now” button next to every Twitch video stream must be pretty tempting. Twitch streamers are giving the games they play free advertising, and Amazon could capitalise on impulse purchases from gamers wanting to get in on whatever experience they’re watching unfold on screen.
3) Twitch could be a fully-formed streaming platform
At the moment Twitch is all about games streaming – but there’s no reason the platform couldn’t be used for other things. All users would have to do is unplug the Playstation and plug in a camera, and suddenly Twitch could be used to broadcast live video to the world. Perhaps Amazon’s intention is to create a wider video streaming platform? Whether it would be as part of Twitch, or merely using Twitch’s technology, having access to Twitch’s code and expertise would make such a move much easier.
Though there are a number of live video streaming websites – such as Ustream, and YouTube itself can live stream, the technology has still not quite taken off: Buying Twitch could buy Amazon a major advantage in this field for when the world does decide it wants to stream. Like how YouTube has already revolutionised how we consume video content, could the easy ability to stream live do it all over again?
4) Synergies with Amazon Web Services
Don’t worry, I hate myself for saying “synergies” too. The big hidden side of Amazon is in its “web services” offering. You might not realise it but Amazon is one of the biggest players in cloud computing – offering masses of storage and other services that are scalable to developers. Amazon’s cloud servers power many of the world’s biggest apps, such as the likes of Snapchat. Unsurprisingly, one of the most server intensive things to do on the web is serving up live streaming video. Perhaps Jeff Bezos saw Twitch, and thought that if it owned the company it could cut the costs even more by using its home-made web services? This means more profit for Amazon.
The technology transfer could go the other way too: Perhaps Twitch’s coders and engineers could make Amazon’s web services even better at handling streaming video too.
5) It’s an available acquisition target, so why not?
Twitch was in an interesting position: It was wildly successful, with millions of users, linked to a tonne of different services… yet it wasn’t yet owned by anyone else. For the big tech companies, surely it is too good to resist? Why wouldn’t Amazon, Google, or any other major corporation (Samsung, Apple, Microsoft, Sony, Facebook etc) want to snap it up? Whilst there may be no obvious functional reasons why a tie-up would make sense, simply taking Twitch off of the game board and preventing another company (say, Google) from picking up might be a strategic thing to do.
It makes sense for the big technology corporation with lots of cash to act more like conglomerates: whilst Facebook buying Oculus Rift or Amazon buying Twitch (or even Apple buying Beats) might not make much sense on the surface, it is almost an insurance policy: It is very hard to predict what the next big thing in tech will be, so by having fingers in multiple pies, Amazon can be more sure it will have a stake in whatever the future holds… and given how popular game streaming is at the moment, it seems like a safe bet that it will still grow increasingly popular for a while yet.