Middle market deal making may have slowed in September, but the M&A chart topper for the month was Amazon, which scooped up video gameplay broadcasting platform Twitch Interactive Inc. for a cool $970 million.
Why would the e-commerce giant be seeking a stake in such an esoteric market? Apparently there’s more than just an isolated trend brewing among gamers who not only enjoy playing, but also enjoy watching others play. And Amazon’s on to them through middle market firm Twitch.
The San Francisco startup launched TwitchTV back in 2011 as a competitive video gaming broadcast network for the e-sports community. The platform quickly tapped a market that had already whipped up a Gagnam Style-like frenzy in Korea. The difference is that thrill of watching gamers play didn’t wear off. In addition to commanding 30% of television time globally, the 2.4 billion hours of these videos were eyeballed across the web and TV last year. No wonder then, that in just three years, Twitch grew to draw 60 million viewers per month, according to the company and ranks as the 4th largest website in terms of peak internet traffic in the U.S. according to the Wall Street Journal.
Part of the reason is that Amazon’s got it’s eye on this growing market, particularly because Twitch offers the promise of an entree into Asia, where China and Korea hold the #1 and #3 markets for Internet viewing of e-sports. Part of it may have been because Google was originally in talks with Twitch to acquire the startup as a complementary asset to its YouTube platform.
Though the move has been counted by some as a plus for Amazon (and a minus for Google) it has others worried that the mid-market company’s sell out will leave gamers wanting.
As Cameron Faulkner noted in an Op/Ed for TechRadar, Amazon could infiltrate the “counterculture” vibe of the Twitch community. “It opens the door for a lot more ads, a lot more user information going to Amazon and perhaps even an adulteration of the very things that make Twitch wonderful for so many people,” Faulkner writes, “It’s not out of the realm of possibility for Amazon to, one day, start inserting direct links on Twitch to buy things on Amazon.com.”
Mostly though, Faulkner cautions that giants like Apple and Google wouldn’t exist if they’d gotten swallowed up by corporations when they were still SMBs.