SAN FRANCISCO (Reuters) -
Amazon.com Inc snapped up live-streaming gaming network
Twitch Interactive for about $970 million in cash,
reflecting Chief Executive Officer Jeff Bezos' resolve
to transform Amazon into an Internet destination beyond
its core retail operations.
The move, announced by the two companies on Monday, is the largest
deal in Amazon's 20-year history and will help the U.S. e-commerce
company vie with Apple Inc and Google Inc in the fast-growing world
of online gaming, which accounts for more than 75 percent of all
mobile app sales.
The acquisition involves some retention agreements that push the
deal over $1 billion, a source close to the deal told Reuters.
"Twitch will further push Amazon into the gaming community while
also helping it with video and advertising," Macquarie Research
analyst Ben Schachter said in a note.
Twitch's format, which lets viewers message players and each other
during live play, is garnering interest as one of the
fastest-growing segments of digital video streaming, which in turn
is attracting more and more advertising dollars.
The deal, expected to close in the second half of the year, is an
unusual step for Amazon, which tends to build from within or make
smaller acquisitions. Tech rival Google was earlier in talks to buy
Twitch, which launched slightly more than three years ago, one
person briefed on the deal said.
Neither Amazon nor Twitch would discuss how the deal came together
or comment on Google's interest.
In an interview, Twitch Chief Executive Officer Emmett Shear said
the startup contacted Amazon because its deep pockets and ad sales
expertise would allow the startup to pursue its strategic objectives
"The reason why we reached out to Amazon, the reason I thought
working for Amazon, having Twitch being a part of Amazon, would be a
great idea for us (because) they would give us the resources to
pursue these things that we honestly already want to pursue and
they'd let us do it faster," Shear said.
Ethan Kurzweil, a partner at Bessemer Ventures, which has backed
Twitch since its earliest days, said Amazon's expertise in developer
platforms through Amazon Web Services gave it a window into Twitch's
"They understand the power of engaged developer platforms," he said,
noting Twitch's popularity with game developers and publishers was
as important as its popularity with consumers.
Bessemer provided Twitch an introduction to Frank Quattrone, a
banker at boutique investment bank Qatalyst Partners, with a view to
"catalyzing interest in Twitch," Kurzweil said.
Quattrone advised Amazon on its 1997 initial public offering.
Twitch raised $20 million in funding last September from game
publisher Take-Two Interactive Software and firms such as Bessemer
Venture Partners and Thrive Capital.
Other venture backers include Alsop Louie Partners and Draper
More than 55 million unique visitors viewed more than 15 billion
minutes of content on Twitch in July.
Some video game live casters on Twitch have embedded links to the
Amazon's online store. Analysts said the deal may result in more
product tie-ins and a deeper integration with Amazon Instant Video
and Amazon devices like the Kindle Fire tablet and recently launched
Fire TV set-top box.
Twitch and Amazon did not disclose details on new retail
opportunities for Amazon through Twitch’s network of gamers.
"We have lots of ideas we've discussed, there's a lot of interest
and a number of things we can pursue," Michael Frazzini, VP of
Amazon Games, said in an interview.
(Reporting by Deepa Seetharaman and Malathi Nayak; additional
reporting by Sarah McBride; Editing by Leslie Adler, Bernard Orr)