Google Flinches; Amazon Grabs Twitch's 55 Million Monthly Viewers For $1 Billion

While the television industry celebrated itself last night on broadcast television with host Seth Meyers remarking on the irony of the Emmy’s honoring so many shows from cable and Netflix, Amazon had just concluded a deal to acquire a three-year-old service called Twitch that is the leading service in a phenomena that is drawing even larger audiences than the hottest TV shows: people watching other people play video games.

“Last October, 32 million people watched the championship of Riot Games Inc.'s ‘League of Legends’ on various streaming services, more than the series finales of television shows ‘Breaking Bad,’ ‘24’ and ‘The Sopranos’ put together,” point out Douglas MacMillan, Greg Bensinger and their reporting colleagues at the Wall Street Journal

Twitch itself trails only Netflix, Google and Apple in Internet traffic, according to DeepField Inc. It claims more than 55 million visitors each month. But if you never heard of it, you’re not alone. “What’s Twitch? Gamers Know, and Amazon Is Spending $1 Billion on It,” reads the New York Times’ hed.

“Those millions of eyeballs are valuable to web companies, and Amazon, although usually known for its retailing, is no exception,” writes the Times’ Nick Wingfield. “To win in its bid for Twitch, Amazon had to outmaneuver a who’s who of the tech world, including Google — strongly suggesting that these companies think the era of video-game viewing is just starting.”

Forbes’ Ryan Mac reports that Google, in fact, dropped out of the bidding “because it was concerned about potential antitrust issues that could have come with the acquisition,” according to sources familiar with the talks. Variety’s Todd Spangler broke a story in May that Google’s YouTube had reached a preliminary agreement to buy Twitch.

Amazon “snuck in to steal away the burgeoning streaming service,” writes Variety’s Andrew Wallenstein for a reported $970 billion in cash, adding that it’s “unclear” how Google’s deal — “all but done according to multiple sources months ago” — fell apart. But, as Wallenstein points out, there’s “compelling logic” behind Amazon snapping it up. 

“Twitch would give the company something it sorely lacks: an ad-supported content asset that users could access for free,” Wallenstein writes. “Most of what Amazon offers in the way of video is either home video retail or its growing stockpile of original programming that is part of subscription VOD offering Amazon Prime.”

“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 Amazon founder and CEO Jeff Bezos.

“We chose Amazon because they believe in our community, they share our values and long-term vision, and they want to help us get there faster,” said Twitch CEO Emmett Shear. “We’re keeping most everything the same: our office, our employees, our brand, and most importantly, our independence.” 

Twitch was born as a category on a “life-streaming service” called Justin.tv, which “eventually consumed its parent company, and progenitor,” as Wilhelm writes, and shut down earlier this month.  

Prior to yesterday’s deal, “Twitch raised $35 million across several rounds from Bessemer Venture Partners, Alsop Louie Partners, WestSummit Capital, Take-Two Interactive Software, Draper Associates and Thrive Capital,” reports TechCrunch’s Alex Wilhelm.

“In the last year, one of Twitch's biggest catalysts for growth was its inclusion in” Microsoft Xbox and PlayStation 4 game consoles, reports CNet’s Donna Tam. “It made headlines … for the live streams of a crowdsourced game of Pokemon and goldfish playing classic video games,” she writes.

Along the way, Twitch has also created some flush gamers. It earns its keep through advertising, sharing revenue with select broadcasters in a partner program. 

“While the audiences for many broadcasters are so small they make little money, some broadcasters are said to earn over six figures a year,” writes Wingfield.

Twitch members can freely:

  • Follow their favorite channels
  • Get notifications when they go live
  • Chat with other viewers
  • Send and receive direct messages
  • Start their own broadcasts

A Twitch-commissioned study by LifeCourse Associates released in June found that “contrary to popular perception … gamers are more social, family oriented, educated, optimistic, successful, and socially conscious than their non-gamer counterparts.” 

Said Neil Howe of LifeCourse in a release about the study: “The old stereotype of the solitary geek gamer is over.”

A billion or so bucks would seem to prove him right.

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4 comments about "Google Flinches; Amazon Grabs Twitch's 55 Million Monthly Viewers For $1 Billion".
  1. Dan Ciccone from MEDIAFICIONADO , August 26, 2014 at 10:44 a.m.
    Amazon has yet to communicate what they really see in this deal. Most of the content consumed on twitch is already free and it is very unorganized. Amazon has only expressed that this audience is important to them...as it is to hundreds of other merchants and media companies. The gaming industry has a habit of "selling out" to corporate America resulting in soft implosions...1UP, IGN, GameTrailers, and Xfire come to mind. Now that Amazon has bought their audience, let's see if they can bring value to the consumer that twitch could not.
  2. John Grono from GAP Research , August 26, 2014 at 7:14 p.m.
    Could the author please clarify the 32m for Riot Games championship, versus the finales of BB, 24 and The Sopranos. Was the 32m a global figure? Also was it a cumulative figure - i.e. did the 32m relate to the entire duration of the RG Championships rather that just the 'finale' (clearly I have no idea of its format)? Were the three TV finales data just US domestic and just the live broadcast?
  3. Thom Forbes from T.H. Forbes Co. , August 26, 2014 at 9:37 p.m.
    Here's more on Riot Games' "League of Legends" championship figures cited in the Wall Street Journal report, John. http://www.theverge.com/2013/11/19/5123724/league-of-legends-world-championship-32-million-viewers
  4. John Grono from GAP Research , August 27, 2014 at 8:01 a.m.
    Thank you Thom. The article is not totally clear but it appears to imply that there was a concurrent audience of 8.5m and a gross cumulative audience of 32m, so definitely healthy. But it appears to be a global figure. Comparing it to domestic audiences is not a level playing-field, so we should keep the comparisons fair.