Video games, a strong link in Amazon’s strategy

by bold-lichterman

Google was also in the running but it was ultimately Amazon that got its hands on Twitch, an American video game streaming platform (created by the founders of Justin.TV). Amount of the transaction: $ 970 million, or more than 735 million euros. This is one of the biggest acquisitions ever made by the group led by Jeff Bezos.

50 million monthly users

Based in San Francisco, Twitch is a platform on which users can broadcast their video game sessions (PC, Xbox One, PlayStation 4, etc.) and chat with each other. The games filmed and commented by the player are offered live and in replay. Currently, the Twitch team claims around 50 million monthly users, a community that alone accounts for nearly 1.35% of global internet traffic! Founded in 2011 by Justin Kan and Emmett Shear, the company had raised $ 15 million in 2012 and then $ 20 million in September 2013.

The takeover of Twitch will allow Amazon to develop its strategy in terms of content offering. As a reminder, after having historically positioned itself on the digital book market, the firm has been diversifying for some time. Little by little, it is expanding the scope of its activities, and is betting on a diversification of its offer, on different types of content. Indeed, in addition to its cloud hosting business which represents a major part of its income, it owns the IMDb cinema portal, and the literary social network Goodreads. It strengthened in the field of streaming video in April, with the launch of its FireTV box, then in that of music with Amazon Prime Music, a service launched in the United States in June. Now it is strengthening itself in video games with Twitch, a sector in which it has been present since 2008 with the acquisition of Reflexive Entertainment, a video game development studio. She had already fleshed out her branch gaming by buying the Californian studio Double Helix Game in February 2014, to integrate it into its subsidiary Amazon Game Studios, created in 2012. “They will be able to sell games directly via Twitch, by including a link placed in the side scrollbar”.

Julien Thierry, founder of the gaming platform Eclypsia, believes that this buyout will surely lead to “achieve economies of scale and both lower the cost of bandwidth for Twitch and even more fill the Amazon data center”.

In fact, the firm seems to be working on the constitution of a global ecosystem bringing together hardware and content inputs. The integration of video game content from Twitch enriches the range of content available on devices marketed by Amazon: the Fire Phone, the Kindle Fire tablet and the FireTV. Twitch has quickly become one of the leading sites for e-sport community, it is also the official platform for broadcasting world video game championships and the E3 international show in Los Angeles. And given the business behind it, we quickly understand the appetite of players like Google or Amazon for site.

“A rapidly growing market”

For example, some videos about games League of Legend and Dota 2 bring together several thousand spectators simultaneously for each broadcast. The sport “Is becoming a very common activity among video game players and among children and adolescents. Twitch has over 50 million users a month and they’re not the only ones, there are quite a few other players. And at the end of the day, it’s a bit like watching sports at the tÉlé ”remarks Mathieu Nouzareth, CEO of FreshPlanet, which notably publishes the music platform SongPop. ” The number of content producers on Twitch is enormous, much more than normal and video games are a rapidly growing market on an interesting target, ”he continues, and deduces that“ Amazon also has great ambitions in the game video “.

Amazon is in the process of considering the development of video ad management on the platforms it controls. The American firm is still a Petit Poucet figure in the field of advertising, but nevertheless follows in the footsteps of its competitor Google and would no doubt like to be able to do without its services. The Wall Street Journal affirmed moreover on August 22 that the Seattle-based company is currently developing its own online advertising targeting and placement software, in order to not only compete Google, but also Facebook and Microsoft. Amazon would thus gain autonomy: it would avoid having to go through Google AdWords and therefore risk sharing information with high potential on the behavior of its customers. Twitch CEO and Co-Founder Emmett Shear said, “I think our ad sales will increase with access to Amazon resources.” According to the economic newspaper, the American company has reportedly already contacted several potential advertising partners to begin testing the new platform, dubbed Amazon Sponsored Links. According to a study published at the end of May, e-sport generated 32.8 million dollars in advertising revenue in 2013, and this figure could grow by 250% by 2018.