Amazon Buys Twitch for $970M

Months ago, reports swirled that Google was in talks to buy game streaming site Twitch for something like a billion dollars. That arrangement made some degree of sense considering Google already had YouTube under its belt. News broke last night, however, that Twitch would in fact be acquired by Amazon for a whopping $970 million in cash.

An open letter to the Twitch community penned by CEO Emmett Shear was posted on the company’s website shortly after the news hit:

“Today, I’m pleased to announce we’ve been acquired by Amazon. We chose Amazon because they believe in our community, they share our values and long-term vision, and they want to help us get there faster. We’re keeping most everything the same: our office, our employees, our brand, and most importantly our independence. But with Amazon’s support we’ll have the resources to bring you an even better Twitch.”

The choice of words there – that they “chose Amazon,” certainly implies that the earlier reported talks involving Google may certainly have been partially accurate. It seems pretty clear that there were more than a few suitors vying for Twitch’s affections, and yet Amazon was able to convince Twitch’s execs that it would be the best fit. That excerpt also points out that the company will be able to keep its independence while living under Amazon’s corporate roof, an arrangement that sounds a lot like Google’s acquisition of Nest, and Facebook’s acquisition of Oculus. In short, it’s a good day to be a Twitch employee, since your job is probably more secure than ever.

Interestingly, a post on TechCrunch rubbed some numbers together and determined that the $970 million deal represented about 20 percent of its total $5.06 billion in cash holdings. That’s not an insignificant sum considering the questions that remain about how Twitch fits into Amazon’s larger corporate strategy – well, aside from the one that seems to simply say “own everything.”

Amazon also has a reputation for spending and losing money in the short term in the name of long term gains. That strategy saw a direct impact on its stock prices after the latest fiscal quarter’s reports were disclosed, since increased spending forced profits down.

It seems likely that Amazon will continue along the path of spending big now to hit big in the future – but we’ll have to wait and see whether or not the acquisition of Twitch pays off in that regard.

[Source: Twitch, TechCrunch]