Amazon's $1 Billion Acquisition of Video Game Streaming Twitch.tv Is a Bargain

Amazon.com’s stock (NASDAQ:AMZN) has tallied a consistent 33% annual compounded price return over the last 5 years. The secret sauce of the company’s success is being able to engage with an increasingly younger demographic. The company’s latest deal to buy Twitch for more than $1 billion is being lambasted by most analysts, but I believe it is brilliant.

Amazon has bought America’s fastest growing television network. Twitch.tv has 55 million mostly millennial visitors who watch up to 16 billion minutes of its videos each month. The $1 billion acquisition gives Amazon a live TV network that already has more viewers than CNN and is highly valued by a prime consumer demographic of millennial youth.

When Chairman Jeff Bezos started Amazon by selling books on the internet in 1994, the number of active readers, defined as those that read 11 or more books per year, had declined in America since 1978 from 42%, or 93 million, to 34%, or 90 million, in 1994. The number of Americans that had not read a book in a year had risen from 8% in 1978 to 13% in 1994.

The active readers continued to decline as a percentage in the U.S. to 34% at the end of 2013. The percent in the U.S. that had not read a book also leaped to 23%. But that smaller percentage of “active readers” grew in number to 108 million in 2013.

Over this entire period of 35 years, it has been non-college educated and those Americans that earn less who are reading less. The median college educated American now reads 16 books a year, and the median of those Americans that make over $50,000 a year read 17 books per year.

By Amazon forming a virtual monopoly in selling books online to the demographic of mostly college educated Americans with higher incomes, Amazon.com has to become the world’s dominant online retailer by diversifying into DVDs, CDs, video and MP3 downloads/streaming, software, videos, games electronics, apparel, furniture, food, toys, and jewelry. The company also now produces consumer electronics—notably, Amazon Kindle e-book readers, Kindle Fire tablets, Fire TV, and Fire Phone — and is a major provider of cloud computing services.

Twitch.tv is the place to go to stream video game competition and draws tens of millions of millennial viewers each month. Unlike YouTube, Twitch hosts stream almost all their video as live sessions of games like World of Warcraft, League of Legends, and Counter-Strike. Broadcasters/competitors often have thousands of followers during the gaming session and in dedicated chat room sessions afterward. The most popular streamers can amass millions of dedicated fans.

Like YouTube, anyone can start and host a channel. As broadband has ramped up to handle mass content, Twitch.tv became the dominant “e-sports” network to watch tournaments that now include cash prizes and in front of millions of online viewers. Twitch.tv is the equivalent of gamers' Monday Night Football.

According to the New York Times, Twitch.tv generates 55 million regular visitors from around the world each month, and those people watch 16 billion minutes of its videos. More than 1.1 million people broadcast their gaming activity to the service.

With internet carriers ramping up broadband speeds, Twitch.tv viewership and competition will continue to accelerate. Amazon intends to be right there to seamlessly sell tens of millions of millennials everything they want with same day delivery.

Chriss Street suggest that if you are interested in technology, click on Jerry-Brown’s Kill Switch is great for Criminal Gangs.


advertisement

Breitbart Video Picks

advertisement

advertisement

Fox News National

advertisement

advertisement

Send A Tip

From Our Partners