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Amazon acquires ‘Twitch’. Any Significance?

On Monday, Amazon announced that it had finalized a deal to acquire Twitch.tv, a live streaming video service geared towards the broadcast of video game gameplay. For $970 million, the world’s largest online retailer bought a website where people from around the world could log on to watch other people play games like World of Warcraft, Pokémon, and Minecraft. For months ahead of the announcement, it was rumored that Google was in talks of buying the service in a move similar to its purchase of YouTube in 2006. Talks between Google and Twitch deteriorated amid concerns about antitrust violations that left Amazon in the green to seal a deal.

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While popular in online gaming circles, Twitch as a company has not carried the same kind of brand cachet as other streaming services like Netflix, HBO Go, or Hulu. According to statistical research coming from cloud-data analytics firm DeepField, however, Twitch accounts for about 1.8% of all peak, U.S. internet traffic, outpacing Hulu, Amazon, Pandora, and Tumblr. Amazon’s “Instant” video streaming service, which is a lesser known feature of its Prime membership, has slowly been expanding its programming catalog to go toe-to-toe with its main competitor Netflix. Numbers recently published in the New York Times, though, point to Twitch’s potential to overtake many traditional broadcasting networks in terms of viewership.

At 715,000 concurrent viewers, Twitch’s primetime viewing audiences outnumber those of MSNBC, CNN, and E!. Sporadically, Twitch will boast numbers larger than MTV. But, the amount of video consumed on Twitch’s network is relatively small when compared to its online rivals. Measured in hours, Netflix users consume eight times more video content than Twitch users each month. Moreover, YouTubers consume up to 24 times more video. Twitch’s audience may be smaller, but it is the way that people create, collaborate on, and consume its content that sets it apart from the competition.

Earlier this year more than 175,000 people participated in “Twitch Plays Pokémon,” a collaborative playthrough of the popular children’s game that crowdsourced directions from Twitch viewers. The experiment, a first for Twitch, demonstrated that the service’s audience could be as interested in actively interacting with the content as they were in consuming it.

In 2013, 58% of Twitch’s 55 million users reported watching about 20 hours of video content each week, or about 3 hours per day. The average user reported watching about 106 minutes of content per day, and those numbers translate to very real sources of revenue for Twitch, advertisers, and creators. Where YouTube videos can vary in length from a few seconds to a few minutes, the nature of video game playthroughs lends itself to longer videos, translating into more opportunities for ad placement and profit generation for people broadcasting themselves.

Like Amazon’s self-publishing book platform, Twitch’s barrier to entry in terms of content creation is relatively low. With a gaming console and internet access, anyone can set up a Twitch channel to stream their play with the knowledge that if they can reach a built-in audience that comes for the games, but ultimately stays for the personalities.

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