(Adds comments from Amazon and Twitch executives, background on
Google interest in Twitch)
By Deepa Seetharaman and Malathi Nayak
SAN FRANCISCO Aug 25 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
"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 more quickly.
"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 potential growth.
"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
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
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