Amazon got a Twitch and bought video streaming service

POSTED BY Analyst Team
Over the past week, talks and speculation have been surrounding the announcement of Amazon’s acquisition of video streaming service, Twitch. Many said that the purchase came as a surprise, while others claimed that it was a natural addition to Amazon’s growing media empire. The deal, which is expected to be finalised in the second half of this year, is worth an estimated $1 billion, the largest in the online retailer’s 20-year history.

Twitch, first introduced in June 2011, is an online live video streaming platform and community for gamers, attracting over 55 million active monthly users to broadcast, watch and discuss video games. In February 2014, Twitch was ranked fourth for peak Internet traffic in the US, commanding 1.8% of total peak online activity, following household names such as Netflix, Google, and Apple (Amazon was #8 on the same list). This supports the notion that the website serves as an epicenter for online entertainment and social video gamers.

Twitch has gained significant momentum in a very short time span but its limited financial means represents a burden when it comes to expanding or improving its services. As Twitch CEO Emmett Shear said, “[we] are both believers of the future of gaming […] being part of Amazon will let us do even more for our community. We will be able to create tools and services faster than we could have independently.”

Here at Juniper we believe that the acquisition goes beyond just content – it is an investment in a well-known and established online infrastructure, content streaming, and community. Twitch is one of the most visited websites in the US with the 55 million monthly active users spending at least 20 hours a week on the site. This means that the service is doing very well in terms of attracting and engaging users and building a loyal base of visitors. Leveraging this community, and potentially replicating the level of engagement in other business segments, could grow Amazon’s advertising services revenue and even give the service, which is currently listed under “Other” revenues, its own line in the company’s earnings report.