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Amazon's new acquisition is a billion-dollar site where people watch each other play games

The most exciting spectator sport in the world is gaming, and Amazon just grabbed the biggest broadcaster.

A typical Twitch stream, with a user playing Dota 2, one of the most popular spectator games. Image: Screenshot
A typical Twitch stream, with a user playing Dota 2, one of the most popular spectator games. Image: Screenshot

The latest big-money tech acquisition is likely to split people into two camps: those with an opinion of whether Twitch is worth the $970m that Amazon has paid for it, and those who don't know what Twitch is. Unlike most buys like this, the target in question has something of a limbo-like fame. Twitch is one of those things that is both extremely popular and yet of meagre reputation outside of its fanbase, like the NFL in countries that aren't the United States, or Nascar in US states outside of the Bible Belt.

Comparing Twitch to sports does make sense, though. The basic gist of Twitch is that it's a website that lets people stream their screens as they play video games, and lets other people watch as they do. The players can also appear within their videos as they want (giving a running commentary while playing is common), and audiences can talk to each other with chatrooms, but that's really the basic mechanic. It is extremely similar to YouTube in parts, with popular players attracting audiences of thousands, or even millions, on their channels.

Whether this sounds ludicrous or not will largely correlate with your age (the kids love it, and it's available on the Playstation 4 and XBox One consoles as well as PCs), or your involvement in the larger world of gaming. For those unaware, spectator gaming is on course to match some of the more popular spectator sports, and Twitch is the undisputed king of the field - the Sky Sports of gaming, if you will. It has 55m unique monthly users watching any of its one million players, and in one month alone Twitch users on average watch a combined 15 billion minutes of live or recorded gameplay. Twitch is three years old, and is roughly half the size YouTube was when that site was three years old. And, to simplify somewhat, Twitch is a success in spite of the existence of YouTube for the same reason Instagram is a success in spite of the existence of Facebook. There is little that Twitch does that YouTube doesn't, but it dispenses with the things that it doesn't need to do for the community which uses it.

The most popular games on Twitch, like multiplayer arena-battler Dota 2, are featured in tournaments which boast viewing figures that rival the biggest shows on television - a recent Dota 2 tournament, The International, boasted a prize fund of more than $10m, and was broadcast on actual TV sports broadcaster ESPN to viewing figures which "exceeded expectations across the board". Some Twitchers have enough paid subscribers to their channels that they can quit their day jobs and live on the proceeds from their gaming.

For months now Google has been courting Twitch, even going so far as to reportedly make a bid of $1bn. Yet Twitch chose Amazon (and, notably, a slightly smaller offer - albeit entirely in cash). Why? The likely reason is YouTube - after all, Google already owns the world's biggest video streaming site, and Twitch would likely have always stood as a backup or sub-site by comparison.

Conversely, Amazon's doggedly trying to get into video streaming and game distribution. Amazon Instant Video is morphing from a pay-by-title rental service into something more like Netflix, and the company has started producing its own games and TV titles. Amazon also, crucially, doesn't have its own YouTube competitor - Twitch goes a long way to filling that role - while also providing the experience and infrastructure to handle the site's rapid growth, which is reportedly beyond the ability of the current team. At peak times, Twitch generates more bandwidth than sites like Facebook; only Netflix, Google and Apple are bigger, bandwidth-wise.

It's unlikely we'll see Twitch become more like YouTube - it has no need to, after all - but Amazon will want to exploit all those watching eyeballs. YouTube currently generates $1.96bn in ad revenues for Google, and Twitch is likely to be able to match a reasonable fraction of that.

All this, for a site whose biggest mainstream success so far was when a user set up a camera to detect how his goldfish was swimming and used that to play Pokemon:

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