Who’d have thought that Monday would see so much Twitch acquisition news? And in that case, an announcement of an acquisition?
For nearly a billion USD, Amazon has picked up one of the highest trafficked sites on the Internet. It seems like a discount for service that serves a video to millions of users every day.1 The proposition’s value compounds considering the high audience events shown on a near-daily basis. With the ever-increasing number of ongoing events such as Riot’s LCS drawing hundreds of thousands of viewers per broadcast, it makes sense that Amazon would want a part in this.
Then there’s the news that Amazon’s new ad service would be pricing its ads on metrics like impressions instead of clicks. Most social networks use the impressions metric when it comes to displaying ads to their users.2
Later in the day of the announcement executives from Amazon and Twitch went on to a live town hall to explain the acquisition in detail. While Twitch’s CEO stayed on message, the Amazon executive shared why the company moved forward with the bid.3
To me, there are two major points that stand out about this acquisition.
The first is that this decision seems to be a business-minded decision on Twitch’s side. Any sort of acquisition—as long as it was in cash—would allow Twitch’s to continue with its current plans. I don’t think that Twitch had financial issues prompting it to find a buyer. I think part of their long-term plan included an acquisition or a large cash infusion. I also think that going public would not have been the right move for Twitch. Due to the current economic climate, the stock market would’ve more than likely eaten Twitch alive.
The second point is that I think expanding the customer base for the ad service was a goal. With Amazon as the parent company along with their new ad service, the acquisition becomes more of a perfect union of sorts. Amazon is looking to plant its new ad service into uncharted territory and Twitch is looking for more ad buyers. The acquisition will give Amazon practical data for their ad service. Before this acquisition, they’ve been allowing users to use Google’s AdSense service. Rest assured, that won’t be the case in the future.
My main reservation? Amazon’s hamstringing of Comixology after acquisition.
Before the announcement, I joked that if the Amazon deal went through that it would mean the end of support for Twitch’s apps. These apps, which are on consoles and platforms like the Xbox 360, the Xbox One, and iOS, are solid performers. Under Amazon leadership, Comixology, a widely heralded comics storefront for mobile devices, notably deviated from native iOS purchasing after being acquired earlier this year, upsetting a lot of users by complicating the purchase process.4
Nowhere in the statements released regarding that purchase mentioned anything about Comixology maintaining independence, though. As for Twitch, Amazon Games VP Michael Frazzini said that Twitch will remain independent in a town hall broadcast the day of the announcement. Regardless, I still think that support for apps on platforms like Apple’s iOS and Microsoft’s Xbox is vulnerable. At the same time, I think customers that use Android-based devices like the Kindle Fire have nothing to fear.
It’s too early to forecast the success of the deal, but I believe within the next year there will be results with which to reach a conclusion. If Amazon reports revenues from its ad service as part of quarterly reports it may be a little bit easier to infer success. If not, observers can only rely on the circlejerk of personalities and salespeople to gauge reaction… and those folks aren’t always reliable.