Amazon Buys Twitch.tv (Not Google) for Almost $1 Billion

In a twist that I think has everyone surprised, Amazon has just bought Twitch.tv for nearly $1 billion. Originally, it was heavily suspected that Google would be the ones picking up the livestreaming site as Google desperately wants to get into the livestreaming market. Twitch.tv provides a very interesting vertical because of the insane amount of traffic it receives, making it a huge value proposition.

However, when the rumors started popping up over the deal with Google, many streamers and viewers on Twitch had a great deal of concern for the implications. I, myself, discuss in a vod some of the deep rooted issues implied through the buyout and we already saw a disastrous incident when the company announced the implementation of audio tracking technology that silenced archived broadcasts (called bookmarks or vods) that had supposedly contained copyrighted music. Everyone immediately pointed to YouTube’s own draconic DMCA takedown notices that have caused immense headaches for everyone, which people felt were the start of Google’s upcoming ownership of Twitch.

With Google out of the picture and Amazon included, there’s a great deal of discussion what this means. In reality, Amazon is a far better fit for Twitch than Google and many streamers have already set themselves up to use Amazon. One common feature from Amazon that many Twitch streamers utilize is Amazon’s Wishlist. As most Twitch streamers, especially full time ones, depend on donations and subscriptions to maintain their channels, a large number of channels add odds and ends in the hope that people can help these streamers achieve certain goals. As it is up to the individual streamers/channels in building their channels, providing a tighter integration for offering discounts to Amazon with Twitch partners will be an interesting step in helping Amazon further market their products.

Some high end streamers do giveaways for subscribers. I know a few that hold contests for Amazon gift certificates. These channels tend to be fairly popular channels and are perfect for Amazon’s marketing strategy. Maybe with the buyout, more Twitch partners will have access to provide giveaways to their channels, highlighting products that Amazon (like movies, gaming gear, toys, etc.)

Beyond these aspects, I think Amazon can potentially in the future offer a safe haven for streamers who use music in their background to help provide a sense of identity for their channels. As I mentioned before with the music copyright detection silences, many streams were threatened and even the CEO from Twitch admitted during a reddit IAMA that the move was essentially a PR disaster. However, the thing is that streamers who use music as a critical part of their channel (and trust me that’s the vast majority of them) essentially are offering free advertisement to the music industry at large.

To me the two moves I would make as Amazon in this are to buy out both Pandora and Spotify. Many streamers use one service or the other during their stream. Instead, what Amazon/Twitch should do is use the music identification service to promote songs on these channels. I can see a feature where as each song plays, there’s a link to be able to directly purchase the song from Amazon. Often times, you’ll see people in the chat asking streamers what song is playing. I myself have actually bought from iTunes several songs because of the streams I hang out on.

Because of this idea, it’s fairly clear to me that Amazon/Twitch needs to be an enabler rather than disabler in helping the music industry find a new outlet in distributing their music. Rather than muting streams/VODs, they need to do more to promote the artists and songs themselves. Perhaps, streamers can participate as affiliates in this since they effectively are the ones who help market the music. To me it’s just an overall win-win strategy.

But I’m going to take this one step further and say that Amazon/Twitch should include movies and TV as well. I know a few streamers who have a “side perk” involving TV and movies as part of their subscription perk. Imagine if the subscription service (Amazon Prime anyone?) is bumped up a few dollars to allow partnered streamers to legally broadcast a movie of their choosing. The thing both the music and film/TV industry need to realize is that viewers want to hang out with their favorite streamers and do more activities. Music, film and TV are very closely aligned areas that are social and connected with streamers identity. The content industry should embrace this fact and let Twitch become the new virtual home theater.

By doing this strategy, Amazon can then compete in a very one sided market. They can even work alongside Netflix and iTunes in this in becoming an affiliate and enabler through Twitch. But the main thing is that they need to work with the community rather than blindly forcing them to accept shitty ads of viagara and Geico and give streamers and the viewers what they want.

The thing is that a lot of money men look at this deal as just “eyeballs and ad dollars.” It’s not. I don’t think most of these people understand what Twitch.tv really is nor what the community is all about. Twitch is worth $1 billion because of the community. It’s a very strong and unique community that continues to grow and can serve as a model for other businesses to follow. However, Twitch also is very vulnerable because at the core, it’s just a video streaming service with a primitive chat. It’s the community that can make and break the site easily. For this to succeed, Amazon and investors at large have to stop looking at viewers as just potential eyeballs but people who have very specific wants and are willing to get them as long as you cater to those specific wants.

 

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