Amazon’s $970m acquisition of Twitch can be seen as a statement of intent

TwitchNot satisfied being a retailer of products, Amazon is moving increasingly towards being a publisher. It follows the self-publishing movement from Amazon’s Kindle store; curating its own App Store; Amazon Studios creating its own TV shows for Amazon’s Prime Streaming service; and more recently its own video games through Amazon Game Studios. Amazon does not just want to sell you products, it wants to you to be fully immersed in the Amazon ecosystem. We estimate Amazon has roughly 603 million monthly visitors.

Twitch is a video game live broadcasting website that allows anyone to stream themselves playing video games. And while 70% of 16-24 years old watch online TV (as seen in our Entertainment – Q2 2014 report), Twitch and other live streaming websites are a new kind of entertainment, users can interact and converse in real time. Twitch has reported more than 45 million visitors every month and at peak times in the USA drives more traffic than Facebook or Amazon.

While the live broadcast is a huge draw, the live chat is also a significant reason for Twitch’s success. And although it is less of a stream of a conscious and rather a tidal wave of emoticons and memes, it has created a sense of community which is embraced by both the watcher and broadcaster.

Visitors to Amazon are already among the most prolific on video streaming sites: they are 76% more likely to watch on demand TV online and 65% more likely to stream live TV, so there could be some crossover from Amazon onto Twitch.

However, the main opportunity for Amazon is to monetise Twitch more efficiently. Gamers are 5% more likely to purchase a product online than the average. Having an Amazon link to the game being played is a simple option. Gamers and video streamers are more likely than average to be a monthly visitor of Amazon, with streamers being 20% more likely to. The key differentiator between Twitch and YouTube, for instance, is that Twitch is only for video games. Amazon is getting a dedicated and passionate user base that is crucially heavily invested in the service, and there is no real competition in the market.

Twitch has become the place for video game publishers to show off games and generate interest and hype. This enables adverts to be targeted to a very specific group of people, and our data suggests that it is primarily the 16-24 age group who are gamers, our data suggests that globally 42.7% of 16-24 year olds are interested in gaming online. This demographic can then thus be targeted very specifically, Amazon is known for its targeted advertising based on browsing and shopping history. Amazon could monitor the type of games that Twitch’s users watch and then advertise based on watching habits.

Jason Mander, head of trends at GlobalWebIndex