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What does Amazon have to do with gamers?

August 28, 2014

Amazon earlier this week agreed to pay $970 million in cash to acquire Twitch, a website that lets users watch and broadcast video game play.

In its statement, Amazon noted that in July, more than 55 million unique visitors viewed more than 15 billion minutes of content on Twitch produced by more than 1 million broadcasters, including individual gamers, pro players, publishers, developers, media outlets, conventions and stadium-filling sports organizations.

The online social community enables viewers to follow their favorite channels, chat with one another while watching content, and send and receive direct messages.

"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. And, amazingly, Twitch is only three years old," said Jeff Bezos, Amazon's CEO, in a statement. "Like Twitch, we obsess over customers and like to think differently, and we look forward to learning from them and helping them move even faster to build new services for the gaming community."

"Being part of Amazon will let us do even more for our community," said Twitch CEO Emmett Shear. "We will be able to create tools and services faster than we could have independently. This change will mean great things for our community, and will let us bring Twitch to even more people around the world."

That still left many answers about how Twitch fits with the world's largest online retailer.

Some saw it as a way for Amazon to jump into gaming to offer an alternative to Sony and Microsoft. Also cited was the opportunity to create a formidable streaming platform to compete with YouTube, owned by Google, and Netflix.

With digital video advertising taking off, others believe Amazon may use Twitch to jumpstart its fledgling online ad business. Other reasons for the acquisition cited were developing content overall, a way to scale Amazon's cloud computing infrastructure, as well as the path to reach young/tech-savvy hard-core video gamers.

But a few also admitted that, much like the questionable acquisitions of Facebook/Oculus Rift and Apple/Beats, the value may not be apparent at first.

"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," wrote James O'Malley, editor at TechDigest.

FINANCIALS:     [NASDAQ:AMZN] [ ]

Discussion Questions:

How do you see Amazon benefitting from its acquisition of Twitch? Do you see a connection to its core e-shopping model?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Of the following, which do you think Amazon's acquisition of Twitch was most about?

Comments:

I'm with the camp that says that the value of this acquisition may not be readily apparent at first. Twitch certainly provides Amazon with millions of new users, all of whom consume things that Amazon sells. The acquisition could be a boost to Amazon Prime, Amazon Music and Amazon's cloud offering. Bezos and company have a history of successful acquisitions, and though the rationale behind this one may not be clear, I would never fault their logic.

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Max Goldberg, President, Max Goldberg & Associates

Why would Amazon buy a website with 55 million unique visitors in a month? To paraphrase Willie Sutton, "because that where the players are." The real question is how is Amazon is going to monetize that traffic.

I would love to tell you that I know exactly how they are going to do it, but I am not sure that Amazon does either. However, this is certainly more about getting Twitch users to become Amazon shoppers than vice versa.

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Steve Montgomery, President, b2b Solutions, LLC

Why? 55 million unique viewers in three years of business. They are a captive audience spending hours at a time in front of the device Amazon sells products on. My guess is they will also expand the online streaming capabilities to compete with Google/YouTube and possibly Netflix.

I do question the value of $1 billion! What are their earnings? How do they currently make money? It isn't inherent like it is for sites like OpenTable. I'd sure like to be the founder of Twitch. Not bad for a three-year investment.

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Janet Dorenkott, VP & Co-owner, Relational Solutions, Inc.

Gamers are a unique bunch and most are addicted to the habit. This buy is for getting into this unique group of people that will spend on Amazon for anything that will help improve their gaming scores—from keyboards, to controllers, to new games, to advice books.
I am not a gamer, but some of my kids are addicted (bad parenting on my wife's side of things, I was the perfect parent ...)

More money is buying a Gamer's Anonymous operation. many addicted gamers will need to break the habit someday.

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

What makes an internet site relevant is attendance and participation. In order to expand the use and growth of an e-commerce company the youth awareness efforts and attraction are equally critical. One place where you can find a never-ending supply of youth from all over the world is the gaming industry. This move was a stroke of brilliance for Amazon that holds huge future benefits in both sales and advertising, if they just don't screw it up, for many years into the future of e-commerce.

'gjarnoldjr'

First I've heard of it. It may help drive more sales if you can see if you like the game before you decide to buy it.

Pam Thom, .., RefundSweepers.com

My sons at college and all their gaming friends use Twitch and already purchase from Amazon. How Amazon leverages this purchase could be tricky.

Gaming has become a huge spectator "sport" complete with the same kind of franchise building and licensing opportunities as professional athletes. The potential for sales is phenomenal.

However, the marketing would have to be seamless since this group is also ad adverse. I'd like to think that this purchase will lead to some unexpected and less obvious online advances.

'RetailRetell'

The answer is in the numbers. With this numbers of gamers and minutes, Amazon has decided it is a strong revenue source. How they are going to capture it is something only they know. But Amazon is not going down this path without a game plan to make money.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

"The value may not be apparent at first." Or ever. Are they 55 million cash-laden consumers or 55 million adolescents with more time than money? Will they stay with "Twitch"—where do they get these names?—or abandon it for something new in 6 months? Might make a difference.

But no matter, this seems to follow the Amazon pattern: do something bizarre, and people won't ask for a justification, they'll applaud the "boldness."

'notcom'

Amazon is an Internet enabler...and all roads lead through the Internet in our future. Twitch is simply one more connector in our Internet-enabled world. Perhaps the better question is, why wouldn't Amazon want this?

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Kai Clarke, CEO, American Retail Consultants

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