Why on Earth does Amazon want Twitch?
Almost exactly a month ago, we here at Pocket-lint published our thoughts on why Google might want to acquire videogaming community service Twitch, presuming that the deal was as good as done.
However, not only has Google not bought Twitch (although not for the want of trying, it is thought), another internet giant has stepped in and brought it under its wing. In a move that few expected, Amazon is now the proud owner of the three-year-old phenomenon. And it's paid almost $1 billion (£600 million) for the privilege.
The question that now remains is, "why?"
Twitch seemed to be a good fit for Google, something that could well have been the deciding factor in the search giant's withdrawal as a suitor. It stood to gain plenty by owning both the largest entertainment video service YouTube and the rising live game streaming platform Twitch, and that would not have gone unnoticed by those charged with enforcing the US's anti-competition laws.
Amazon has no such worries, having no similar service currently under its umbrella. But in many ways, that's what makes this deal so surprising, at least initially.
Amazon sells stuff. That's what it does well. It also makes things that help it sell stuff. In Amazon Prime Instant Video it does have entertainment streaming platforms in the US, UK and other regions, but they complement its existing services, especially its Kindle Fire tablets. So how on Earth does Twitch fit the overall jigsaw?
Amazon CEO Jeff Bezos himself hinted in a statement that Twitch would very much be run as a separate, ongoing concern. "Like Twitch, we obsess over customers and like to think differently, and we look forward to learning from them and helping them move even faster to build new services for the gaming community," he said.
It's a sentiment repeated by Emmett Shear, CEO of Twitch itself, who added: "We will be able to create tools and services faster than we could have independently. This change will mean great things for our community, and will let us bring Twitch to even more people around the world."
And these words from the horses' mouths suggest that the real driver behind the acquisition is exactly what Amazon does best, to sell stuff.
Twitch has the user base and therefore potential to make big bundles of cash for Amazon's retail outlets worldwide. Amazon has bought itself a massive audience of games players and therefore potential games buyers. Over one million broadcasters stream live gameplay on Twitch regularly, over 45 million watch and many of the latter won't already own the games they view being played.
Indeed, many of them are viewing live footage for that exact reason, to see what a game is like before they take the plunge. So slap on a "buy here" button and Bob's your uncle.
Plus, as Amazon will have possibly the greatest marketing and advertising tool to sell games at its disposal, it will be able to negotiate better deals with the software publishers and therefore expand its margins. A dedicated, target audience of 45 million games buyers will be one click away from Amazon's retail site, a fact that will not go unnoticed by the likes of Electronic Arts and Activision.
It's not even a new strategy for Amazon. In 2007 it bought photography site DP Review for its massive user base of camera buyers. And it owns IMDB to help it target movie buffs directly. Owning Twitch gives it an opportunity to sell to a massive collection of die-hard game fans in much the same way.
So Amazon's acquisition of Twitch isn't at odds with its retail strategy, it has purchased Twitch as part of its retail strategy. In many ways, it's a perfect marriage. After all, the games being streamed on Twitch need to be bought somewhere. That somewhere might as well be Amazon.