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Amazon's Twitch buyout may have little to do with its gaming ambitions

Amazon's Twitch buyout may have little to do with its gaming ambitions

Thu 28 Aug 2014 7:20pm GMT / 3:20pm EDT / 12:20pm PDT
BusinessMedia

The purchase will help "complete a puzzle" says Twitch's Matthew DiPietro; Chris Morris examines the implications of the deal

Amazon's purchase of Twitch wasn't something we were expecting.

The reports, after all, had been quite definitive: Google was going to be the buyer. But on Monday, everything turned upside down.

Twitch officials aren't answering any questions about the Twitch/Google talks, refusing to even confirm that the two companies held conversations. (They did, according to people very close to the company - though they never proceeded as far as reports led us to believe.)

While Twitch won't say exactly when it began discussing a deal with Amazon, officials do note the companies have a history.

"We've known each other in various ways for several years," Matthew DiPietro, VP of Marketing, tells GamesIndustry.biz. "Justin.tv was even a finalist in the 2007 AWS (Amazon Web Services ) start-up challenge. From AWS, to integrating Twitch on Amazon devices, to catching up with them at various gaming conferences, this was far from a first date. We've always had mutual respect and admiration for each other."

For Amazon, the purchase is the latest in a series of high-profile moves involving video games. In addition to a music, movie and television streaming device, the company's recently launched Fire TV is also being positioned as a gaming system - one that has the backing of Electronic Arts, Ubisoft, Sega and Disney.

"Google's interest in Twitch has little to do with gaming and everything to do with giving its video advertising revenue a tremendous boost. If the Journal is right about Amazon's plans to go toe-to-toe with Adwords...it could be that the retail giant's intentions were no different"

The retailer has also quietly been building its own game-making studio. In February, Amazon acquired Double Helix games, makers of "Killer Instinct" on the Xbox One and the classic title "Earthworm Jim". At the same time, it has been recruiting top level talent from around the industry, including Kim Swift, designer of Valve Software's "Portal," and "Far Cry 2" lead Clint Hocking.

The company also has a massive cloud system, which will let it easily handle the traffic demands of a streaming service - and which opens up the possibility of a cloud platform like PlayStation Now.

With Twitch, the company apparently has another key chess piece.

"We will fit in very nicely," says DiPietro. "Most game developers use AWS to build their game infrastructure, and they've continued to invest in improving the customer experience for gamers and game developers. This includes developing original new games via Amazon's Game Studios and releasing capabilities like Amazon Appstream and Amazon Cognito to remove even more heavy lifting from game development. Twitch is another substantial step in this direction for Amazon. In other words, we help complete a puzzle that already had plenty of pieces in place."

The question is: Does Amazon know what to do with that puzzle? The gaming industry is moving in a half dozen different directions these days - and Amazon seems to be attempting to establish a foothold in all of them. (Even in the PC and console markets, where it hasn't yet made any games, it is a major retail force for both physical and digital copies of games.)

To its credit, Amazon's leaning heavily on the experts, rather than the gut instincts of its executive suite. Twitch CEO Emmett Shear will remain with the company after the acquisition and all employees have the chance to remain as well.

Amazon, says DiPietro, will simply help Twitch grow its community and accelerate future initiatives, while letting it operate essentially as it has so far.

"Our culture and leadership is remaining the same, so our focus continues to be on listening to our community and creating the tools and features they are most passionate about," he says.

Amazon is taking things slowly when it comes to gaming, artfully deflecting questions about its long-term plans as it continues to finalize its road map. The addition of Twitch to the mix could, in fact, buy Amazon more time to position itself and determine the right strategy to proceed in gaming.

But there's another possibility here, as well. The purchase of Twitch may have had very little - or even nothing - to do with Amazon's long-term gaming ambitions.

The Wall Street Journal last week reported Amazon has been building an ad network to rival Google. That would go on top of its existing - and substantial - ad infrastructure. (eMarket, a third-party research firm, estimates that Amazon will sell $1 billion worth of ads in 2014 - and that's before Twitch became a part of the equation.)

Twitch comes with 55 million unique users as of July, with visitors averaging 106 minutes per day on the service. Total monthly views in July top 15 billion minutes.

Now factor in the advertising income that sort of traffic can command - and the mind begins to boggle.

Google's interest in Twitch has little to do with gaming and everything to do with giving its video advertising revenue a tremendous boost. If the Journal is right about Amazon's plans to go toe-to-toe with Adwords, and there's no reason to think otherwise, it could be that the retail giant's intentions were no different.

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