Amazon moves into online gaming with $970m acquisition

The move is the largest deal in Amazon’s 20-year history and will help the US company vie with Apple and Google in the fast-growing world of online gaming, which accounts for more than 75 per cent of all mobile app sales.

Twitch’s format, which lets viewers message players and each other during live play, is gathering interest as one of the fastest-growing segments of digital video streaming, which in turn is attracting more and more advertising spend.

Kristal Ireland, head of social media at Leeds-based agency twentysix, told The Yorkshire Post: “This acquisition is a significant move for Amazon and further evidence of how the company seeks to sustain competitive advantage by infiltrating developing areas of our digital media consumption.”

The deal is an unusual step for Amazon, which tends to build from within or make smaller acquisitions. Tech rival Google was earlier in talks to buy Twitch, which launched three years ago, according to industry sources.

Emmett Shear, chief executive at Twitch, said the start-up contacted Amazon because its deep pockets and ad sales expertise would allow the start-up to pursue its strategic objectives more quickly.

He added: “The reason why we reached out to Amazon, the reason I thought working for Amazon, having Twitch being a part of Amazon, would be a great idea for us (because) they would give us the resources to pursue these things that we honestly already want to pursue and they’d let us do it faster.”

Industry analysts believe live and interactive streaming, in which Twitch is a pioneer, is the new frontier in online video.

More than 55m unique visitors viewed more than 15bn minutes of content on Twitch in July, up 45 per cent on the previous year.

This growth caught the attention of advertisers, who spotted the chance to reach younger viewers who watch less television.

Live events are appealing to advertisers because audiences can’t skip adverts.

Amazon’s $970m bet - its largest ever - underscores how a loyal and fast-growing following for live-streaming video has grabbed the attention of big brands.

San Francisco-based Twitch is employing staff with expertise in programmatic ad buying, which uses computers to sell ads in real time. This gives advertisers the opportunity to buy space in videos that see a sudden surge in viewership.

In three years, the start-up has become the fourth-largest US producer of peak internet traffic, ahead of Facebook and Hulu, according to Bessemer Ventures, one of its backers.

“The acquisition of Twitch shows Amazon is serious about the size of the gaming market and the potential revenue stream it can open up,” said Ms Ireland.