Amazon beats Google to Twitch purchase

By on August 27, 2014

The tech giants were falling over themselves to snap up the three-year-old video game live-streaming startup for a reported R10 billion.

Back in July, the rumour mill had it that Google was poised to snap up video game live-streaming startup Twitch for around R10 billion. One month on and the search giant has been trumped by Amazon, as America’s tech leviathans battle each other to tie up new markets in their quest for growth.

The all-cash deal for the three-year-old company, which was also being sniffed around by Yahoo, was sealed for close to R10 billion – Amazon’s biggest acquisition since it bought online shoe retailer Zappos for R12 billion in 2009. Twitch had previously raised R150 million and R20 million in September 2012 and 2013 respectively, so its value looks to have increased massively in the last year.

“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,” said the startup’s chief exec Emmett Shear, presumably to ward off the inevitable gamer conspiracy theories.

What’s all the fuss about then? To those not attached to their joysticks, the allure of broadcasting and watching live gameplay seems a little obscure. But it will help Amazon expand its Prime TV and film streaming service and the options available with its Fire TV set-top box, which can already come with a gaming controller. And it is a fast-growing and not-so-little niche

When Twitch was founded in 2011 it had 3.2 million monthly users; in July it had 55 million. Some of its most popular players rake in six figure salaries from a 50-50 split in advertising revenues, R50 monthly subscription fees to their channels and even the occasional spontaneous fan donation. And gaming tournaments are increasingly lucrative – Dota 2 International’s prize money was almost R110 million this year.

“Within video and gaming it seems [Amazon] want[s] to be more of an original producer,” IBB consulting analyst Jonathan Weitz said. The millenial male audience – and one with high engagement at that – was hard for advertisers to get to elsewhere, he added.

It’ll be a disappointment for Google, whose bread and butter is of course ads. But the battle to break new ground for today’s tech giants is far from over.

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