Wednesday, September 3, 2014

Why Amazon bought Twitch: Here are four reasons!!

twitch logo


Earlier this summer, it seemed certain that Google was on verge of purchasing Twitch, the leading site for streaming live video game footage from your computer, PlayStation 4, Xbox One, or even mobile device.
That prospective deal made a lot of sense to all involved: Google owns YouTube, which is a perfect complement to Twitch, and the deal would give Google a better presence with live-streaming in all categories. Also, Google is a gargantuan Internet technology company—Twitch would have a comfortable home there even without YouTube anchoring its video efforts.

Scenario 1: Make gobs and gobs of money

This isn't a bad goal for any company, and Amazon can afford to expand its reach by buying already-successful companies and letting them continue to do their thing. Twitch doesn't disclose its income, but is said to be making tens of millions of dollars each year—and its viewership is skyrocketing, with more than 55 million unique viewers watching some 15 billion minutes of content in July alone.
While that annual revenue estimate is but a fraction of the total purchase price, Amazon surely sees upside in a website that's growing exponentially, and video games aren't about to fall off the map either. Remember when people poked fun at Google for buying YouTube for $1.65 billion in stock in 2006? Yeah, we imagine that worked out pretty well. 
Simply buying a company for the sake of it doesn't really seem like Amazon's thing, however. Amazon usually snags complementary retailers and services (Zappos, IMDb, Goodreads, etc.) that the company can integrate into its own efforts. So while there's surely money to be made, it doesn't seem like enough reason for Amazon to make such a massive acquisition—although Amazon Web Services will help Twitch continue to grow in scale with less fear of snags.

Scenario 2: Integrate Twitch into Amazon

Amazon sells lots and lots of video games—physical console and handheld games, downloadable PC games, and scads of Kindle Fire and Fire Phone games. The site also sells hardware, peripherals, and all manner of related merchandise. So wouldn't it be cool if you looked up a game on Amazon and the site pointed you towards relevant livestreams so you can see the game for yourself?
Maybe. But that sounds like a minefield with limited upside. Twitch streamers are inthe business of entertainment, and they can be brash and vulgar at times; you don't want grandma stumbling upon explicit content when shopping for junior. 
Beyond that, what's to stop you from entering a stream that's packed with spoilers for the game you wanted to play? What about copyright violation issues? Amazon is probably better off sticking with vetted trailers for its retail business. The prospect of hosting exclusive, "official" pre-release streams to drive game pre-orders doesn't sound like a bad idea, however.
Still, while Twitch specializes in gaming, Amazon has just acquired a livestreaming juggernaut—and the Twitch tech could be tapped to stream all kinds of live entertainment to Amazon devices in the home or on the go. Video games made Twitch huge, but now it has the capability to deliver live video of any sort, and Amazon's hulking web infrastructure can handle it.

Scenario 3: Make a big splash in the gaming world

The Fire TV didn't exactly light up the world of gaming as a cheap microconsole, but Amazon has been making serious moves in the video game world. In February, it acquired Double Helix, the developer of Killer Instinct on Xbox One, and then in April, noted game designers Kim Swift (Portal) and Clint Hocking (Far Cry 2) both joined Amazon Game Studios. Surely Amazon aims to tap into that talent to create original games.

Scenario 4: What about interactive streaming games? 



firephone
The Fire Phone might not be setting the smartphone world ablaze, but if Amazon keeps pursuing distinctive tech, it could result in very interesting games.

OnLive jump-started the conversation on cloud-powered gaming—that is, playing a game on nearly any device over the Internet while a remote server somewhere actually powers the software. That way, you don't need powerful hardware, just something with a screen and a connection. And Sony dropped $380 million on Gaikai to power its PlayStation Now service, which streams older games over the cloud to newer consoles and other devices.
Perhaps both the brand power and tech of Twitch could be used to realize Amazon's own ambitions for cloud-powered gaming, which would allow it to keep the Fire TV as a cheap, modestly-equipped little box, but still give it the capability to stream big, AAA-style PC games that you can play on your TV—or even a Fire Phone or Kindle Fire tablet. That seems like the kind of move that would make a ton of sense for Amazon as company that favors low-priced, accessible consumer tech.
And really, all four of these proposed implementations have real benefit to Amazon, large or small—short-term or in the future. Google and YouTube might have been a more obvious destination for Twitch to continue in its current form, but Amazon might have bigger, more ambitious plans for the streaming service. That could have tipped the scales in its favor.

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