Reactions to the Amazon/Twitch acquisition can be separated into two main categories: shock and confusion. With Google widely expected to buy the popular game-streaming service for $1 billion, the sudden change of plan was met with even more surprise when Amazon announced the $970 million cash price tag, less than Google’s rumoured offer but the most Amazon has paid for any company to date (and an estimated 20% of the company’s total cash). So what changed?
Well, now that Amazon VP of games Michael Frazzini and Twitch CEO Emmet Shear have both discussed the unexpected acquisition, the move (and money) seems a lot more justified. It appears that like-minded goals and a philosophical camaraderie swayed Shear, who notes that “one of the things I was really impressed by during the deal discussions was Amazon’s commitment to making Twitch a fully-owned subsidiary, which means I get to remain the CEO, we keep our office, we keep our culture, we keep our strategy … but we get access to all of these resources and products that Amazon has that’ll let us do all of that better and faster”. And when you add up the rest of Amazon’s accomplishments (and align them alongside Google’s drones), Twitch’s gaming-centric service comes across as the perfect match for Amazon’s holistic vibe their recent projects have included a shift to an all-you-can-eat Amazon Prime streaming video model and a Fire phone which integrates most of their services. Frazzini states the importance of selling games on its e-commerce site as gamers then return to buy other products, and so the alliance will allow Amazon to take control of both the hardware and software ends of the market.
But most of all, the acquisition will improve both parties scalability, with Amazon owning the platform for expansion, and just needing a platform like Twitch to bring the service and new legion of consumers. In February, Wall Street Journal reported that Twitch accounted for almost 2% of peak Internet traffic in the U.S during peak hours, only beaten by Apple (4.3%), Google (22%) and Netflix (32%). Although the company was only unveiled three years ago it already has more US traffic than Facebook, and with the two parties now partnered up, Twitch is able to “move into locations [that] Amazon already has servers”, and increase the growth and income for both companies.
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