Amazon welcomes Twitch to the jungle, purchasing the video game streaming website for a nifty $1.1 billion.
What is Twitch, and why did Amazon, the online retailing giant, drop serious coin to acquire it?
Twitch is a conduit for video gaming devotees to watch their fellow enthusiasts play the most popular video games online. Twitch is essentially a video streaming site that is home and a community for the most ardent video gamers. A gamer appears in a window in the corner of whatever game is being streamed and live-chats his way through the game, accompanied by a chat room window in which watchers provide their commentary on the action, or simply talk to the gamer in play or to the other commenters. Visually, the site is similar in look to YouTube.
Twitch, then, is a site for those who like to watch.
Amazon's interest in Twitch and the sizable investment they made may seem out of kilter, until the stats come into play; Twitch, a company that is only about three years old, has 55 million unique viewers per month worldwide. Its demographics are heavily skewed into the coveted 18-49 age group, which comprises 76 percent of Twitch's viewership. Over 68 percent of Twitch viewers have diverted their attention away from watching television and other video content in order to devote more time to Twitch. In fact, many of them are "cord cutters," people who do not even have a cable television subscription.
The average Twitch user spends about an hour and 45 minutes on the site each day. A majority of users, 58 percent, average 20 hours per week. Perhaps most telling, Twitch gobbles up 43 percent of all live video streaming Internet traffic. WWE is next at 18 percent.
Twitch is also popular with gamers who use the site to audit games they are considering for purchase. That's one reason why game publishers find the site so valuable to their marketing efforts. Twitch offers a partner program for professional players, leagues, tournaments and teams, in which Twitch will host their events or set up dedicated channels on the site.
Amazon is already a major reseller of video games, and the Twitch acquisition strengthens their credentials in this market, while giving their gaming products and their expanding array of digital content products greater exposure.
Allegedly, Amazon had to fight off other tech companies, including Google, to seal the deal with Twitch. Amazon, naturally, was drawn by Twitch's extensive reach and spot-on demographics. Who wouldn't want to reach a lot of young people who apparently have a lot of free time and a lot of disposable income?
"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 - from The International, to breaking the world record for Mario, to gaming conferences like E3," said Jeff Bezos, Amazon.com founder and CEO.