Adam Satariano and Brad Stone San Francisco
JEFF Bezos is ramping up Amazon.com’s entertainment ambitions, buying video-game service Twitch Interactive in one of its biggest-ever acquisitions.
Amazon is paying $970 million (R10 billion) in cash for the online gathering place for gamers. The deal, which trumped Google’s pursuit of the start-up, was worth about $1.1bn when retention-related payouts were included, said a person familiar with the deal, who asked not to be identified because the talks were private.
The acquisition gives the internet retailer an online forum of more than 55 million monthly active users, where people discuss games or watch others play. Bezos, Amazon’s chief executive, has made video games a focus of a strategy to add more entertainment services. Just as the company is beefing up its television programming available to Amazon Prime members, it has been luring software developers to build more video game titles for its Fire TV set-top box, Fire Phone and Kindle Fire tablets.
“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,” Bezos said.
He is spending on other media too, including $100m to produce television shows to watch through Amazon’s Instant Video service, a music-streaming service and a book-subscription plan. It also struck a deal with Time Warner to carry HBO shows.
As Amazon competes for customers’ attention, the programming added value to the company’s Prime membership and various devices, said James McQuivey, an analyst at Forrester Research.
“All of these become that much more valuable when they are populated with Amazon content, whether it’s Amazon television shows, or live streams of somebody playing a video game on Twitch. Every minute that you’re involved in an Amazon-led experience is a minute you’re not at Walmart or not with Apple or Google.”
Twitch users watch and share clips of video gameplay, both for entertainment and to learn new ways to advance. Video game publishers have built the capability to share clips to Twitch directly into their products. Frequent user engagement was why Twitch was valued so highly, potentially giving Amazon opportunities to sell advertising and to steer shoppers to its online store, McQuivey said.
“It’s a community of passionate fans who spend money on video games and that’s what makes it a valuable audience for Amazon,” he said.
Amazon and Google are in the midst of an intensifying rivalry. In addition to battling for customers watching an increasing amount of video through the internet, they are also competing for business in online data storage and internet advertising.
Twitch is Amazon’s second-biggest acquisition, following the $1.19bn purchase of Zappos.com in 2009. – Bloomberg