Amazon Acquires Twitch For Nearly $1bn

Amazon has agreed to buy Twitch, which allows people to watch streams of video-game play, for $970 million (£585m), in one of its biggest acquisitions to date.

The all-cash deal is worth about $1.1bn when retention-related payouts are included, according to a report in the Wall Street Journal, which cited an unnamed source familiar with the deal. That makes it Amazon’s second-largest acquisition after the $1.19bn purchase of Zappos.com in 2009.

YouTube competition

Google’s YouTube was said to have been in talks to buy Twitch for a similar amount earlier this year.

Twitch, formerly Twitch.tv, was founded in 2011 as a spin-off of Justin.tv, which allowed people to broadcast video streams of their daily life. The site initially included a 24-hour live stream of co-founder Justin Kan’s daily activities.

Twitch had raised more than $35m in private investment, and has grown to include more than 55 million monthly active users. The service is available on consoles including the PlayStation 4 and the Xbox One, with 1 million users sharing videos in February.

Amazon said the site has succeeded in an increasingly difficult area – building a large user base around online video – and said the site’s fans “spend money on video games”.

“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,” Amazon chief executive Jeff Bezos said in a statement.

Online community

Twitch co-founder Emmett Shear said in a letter to users that the company had chosen Amazon because “they believe in our community”.

“We’re keeping most everything the same: our office, our employees, our brand, and most importantly our independence,” Shear wrote.

Amazon has recently been investing in streaming content including television and movies, and recently began producing its own television programming, as it competes with rivals such as YouTube and Netflix. The content is offered to Prime subscribers and is available on Amazon devices such as the Kindle Fire tablet, Fire Phone smartphone and Fire TV set-top box.

The company also runs a development studio that produces games for its Fire devices.

Even so, the amount paid is large for Amazon, roughly equalling the company’s total net income from the past three years. Amazon has acquired only 18 companies since 2012, far fewer than technology companies such as Google.

Amazon is competing increasingly directly with Google in areas including cloud infrastructure services and online shopping. The e-commerce site is reported to be building an online advertising engine intended ultimately to compete with Google’s AdWords.

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