NEW YORK (AP) — Amazon is buying video game streaming platform Twitch Interactive for $970 million in cash as it seeks to expand its presence in gaming.
As video gaming grows into an online spectator sport, gameplay video feeds are becoming increasingly lucrative. Twitch had 55 million unique visitors in July, most of whom went to the Twitch.tv website to watch other people play games —competitions interspersed with advertising.
“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,” said Amazon CEO Jeff Bezos in a statement.
The deal is the latest example of Amazon expanding into new commercial arenas. It introduced its own smartphone, the Fire, this month. Earlier this summer, it added same-day delivery, a set-top video streaming device to its list of services for members of Prime, its $99 annual loyalty program.
Amazon already has an in-house gaming studio that makes games, and its Fire TV set top box was designed to attract gamers.
Twitch CEO Emmett Shear said Amazon is a good fit because “they believe in our community, they share our values and long-term vision.”
Google had been in talks to buy Twitch, but no deal materialized. Forrester Research analyst James McQuivey said Google might have been a better fit for Twitch.
“Twitch will be a harder asset for Amazon to use,” he said. “It doesn’t have the kind of video streaming audience that Google’s YouTube does.”
However, McQuivey added that Amazon is trying to own more of its own content rather than simply selling others’ and Twitch could help the company do that.
“(Twitch) captures people’s attention for hours a week and it also creates a product tie-in opportunity that Amazon can capitalize on in a way that Google could not,” he said.
Seattle-based Amazon’s purchase of Twitch is set to close in the second half of 2014.
Twitch launched in 2011 to focus on live video for gamers. In July, users viewed more than 155 billion minutes of content produced by more than 1 million broadcasters, ranging from individual gamers, pro players, video game publishers, developers and others. The company does not release revenue figures, but in September 2013 it received a $20 million investment from investors including software company Take-Two Interactive and venture capital firms Alsop Louie Partners and Bessemer Venture Partners.
Digital video advertising in the U.S. is expected to reach $5.96 billion this year, according to eMarketer, up 41.9 percent from 2013.
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