Amazon has big plans for video games.
Amazon.com is investing heavily in games. The company has reached an agreement to acquire Twitch Interactive, the leading live video platform for gamers. In July, more than 55 million unique visitors viewed more than 15 billion minutes of content on Twitch produced by more than 1 million broadcasters, including individual gamers, pro players, publishers, developers, media outlets, conventions and stadium-filling eSports organizations.
“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 – from The International, to breaking the world record for Mario, to gaming conferences like E3. And, amazingly, Twitch is only three years old,” said Jeff Bezos, founder and CEO of Amazon.com. “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.”
“Amazon and Twitch optimize for our customers first and are both believers in the future of gaming,” said Twitch CEO Emmett Shear. “Being part of Amazon will let us do even more for our community. 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.”
Twitch launched in June 2011 to focus exclusively on live video for gamers. Under the terms of the agreement, which has been approved by Twitch’s shareholders, Amazon will acquire all of the outstanding shares of Twitch for approximately $970 million in cash, as adjusted for the assumption of options and other items. Subject to customary closing conditions, the acquisition is expected to close in the second half of 2014.
Amazon now owns its own live streaming video game platform, as well as video game development studio Double Helix. The company has also focused on games for its line-up of Fire Phone, Fire TV and Kindle hardware products. In short, the company now owns an entire ecosystem to develop, distribute and cross-promote its own exclusive games, while giving third-party developers a new avenue to port their games on.
Based on fresh consumer research in the US, video game research firm Newzoo estimates that around 35 million Americans use a Kindle Fire (with color screen). This is lower than the almost 70 million iPad and iPad Mini users, but higher than the 30 million Americans that use a Samsung tablet. Another 10 million Kindle Fire users can be found in the larger Western European countries.
“Games are crucial to any mobile device,” said Peter Warman, CEO of Newzoo. “The share of consumer revenues generated by games through the appstores has risen from 60% two years ago to over 80% this year. For the GooglePlay store it is more than 90%. Depending on country and device, games take up 25% to 40% of time spent on mobile devices, making it one of the largest advertising channels as well. For Amazon the situation is a little different because of the Kindle also being their storefront for all digital content and sales of physical goods. Amazon is about consumer revenues and games is what consumer spend most money on when it comes to digital content.”
Warman said Amazon clearly wants to be one of the key players in digital distribution of content on all four screens: smartphones, tablets, TV and PC. The Fire TV and smartphone effort will complete this circle.
“It is only logical that they will be more aggressive in acquiring content or companies that facilitate content development such as Twitch,” said Warman. “Regarding the TV, I believe android TV gaming devices such as Ouya will turn out to be the icebreakers for the big players Samsung, Amazon, Google and Apple and possibly Microsoft. Fragmentation of the market will be a problem for developers and will slow down the success of Android gaming on TV. But that will just be a temporary situation comparable to the situation android smartphones and GooglePlay was in a couple years ago.”
