Contact: Scott Denne
Amazon reaches for Twitch, a website for watching and broadcasting videogame play, in a $970m deal that could benefit multiple parts of the Amazon empire. In picking up Twitch, Amazon could boost its Prime offering with original content while helping many other parts of the company, from its core retail sales to its advertising business and, of course, its gaming foray.
While Amazon Prime, its subscription media business, lags Netflix, it’s gaining ground fast. According to a June survey by ChangeWave Research, a service of 451 Research, 42% of subscribers to an alternative TV service chose Amazon, up from 33% a year earlier, and only half what Netflix garnered. That same survey also showed the impact of original content on those numbers – 20% of Netflix subscribers said they mostly use the service for original content, compared with just 4% for Amazon. To be clear, Amazon hasn’t indicated how or whether Twitch will be integrated with Prime, but it just bought itself billions of hours of unique content.
Twitch, with a substantial audience overseas, also provides an opportunity to grow Amazon’s media business beyond North America via sales of premium features such as ad-free viewing and larger uploads. Through the first half of 2014, Amazon’s international media revenue – the slowest portion of its business – grew just 5%, or about one-third the rate that unit grew in North America.
Owning Twitch also gives Amazon a fertile ground for entering the gaming market itself – an Amazon console has long been rumored and the company recently acquired game studio Double Helix Games. It also expands Amazon’s reach into a desirable demographic – young men – that it can sell to directly and leverage for its advertising business.
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