What is Twitch and Why Did Amazon Buy It for Nearly $1 Billion?

Amazon Bought Twitch Yesterday for $970 million. Streaming content is becoming more and more popular, and tech giants continue to jockey for position. Amazon made a huge move by buying up Twitch yesterday.

Talking about Twitch is one of my favorite things to do, because those who don’t get it, simply respond with, “I don’t get it.”

So, what is Twitch and why did Amazon just drop $970 million to buy it?

Twitch is an online live streaming website where users watch other people play video games. Yes, that’s it. You’re not alone if you don’t get it.

Sometimes, it feels like you are sitting at a friend’s house where they won’t give you the controller. But there are other times (and this is what Amazon is hoping to cash in on) Twitch streams live events and tournaments, which game enthusiasts numbering in the millions find undeniably riveting. You see, Twitch is to the ‘10s as ESPN was to the ‘80s.

League of Legends, a competitive multiplayer game and perfect example, streamed its 2013 World Championships and 32 million people around the world tuned in to watch the tournament.

Twitch also recently reported 50 million unique viewers in July. And reported in January, that 58 percent of its viewers spent more than 20 hours per week on the site.

The audience on Twitch has high engagement, so much that 65 million members of the community banded together to watch and play a collective game of Pokemon. Users would submit actions in a chat box and a program would execute the actions in the game. This was viewed at its peak by 1.1 million people at the same time and accumulated more than 40 million views.

All of this, of course, adds up to some serious potential cash. This is a young, active audience, perfect for Amazon.

Win-win and a helluva deal. Right? Not so fast.

One of the issues Amazon will need to be careful about is implementing pay-walls or subscriptions. Twitch saw viewers and streamers revolt against the notion of paying for Turbo, Twitch’s subscription service that cut into streamers’ revenues.

Another factor to take into account will be intellectual property usage. Streamers on Twitch tend to play music in the background while playing a game to give viewers something to listen to outside of game sounds.

This made a lot of people in the music industry angry, and Twitch updated its policy to mitigate streamers playing music that is not original. Amazon’s policies moving in will have to keep streamers and viewer happy while allowing the company to keep the litigious monkey off their back.

Also, Twitch’s system can be a bit buggy and streams can crash hard some times, leaving viewers in the dark during a live event.

However, the influx of funds Amazon just gave Twitch is most likely an effort to bolster up the already impressive system Twitch has established.

This is a massive win for Amazon, as Google was looking to buy up Twitch too. As we move forward, look for Twitch (aka Amazon) to offer different streaming content and services to bring in new customers.

As the site continues to grow and more and more people join Twitch, people will eventually stop saying, “I don’t get it.”