Amazon (AMZN - Free Report) acquired video game streaming company Twitch in 2014 for $1 billion and the online retailer is now looking to further capitalize on the $100 billion video gaming industry.
Twitch is a platform similar to YouTube where video game fans can watch their favorite games being played live by other video-gamers; an added form of interaction is available through the options of commenting and posing questions on the site.
When the deal took place, it raised eyebrows. Not many understood Amazon’s intentions of having Twitch’s services as a subsidiary. The move is now clear.
Coming this spring, games and game features will be available for purchase right on Twitch’s site. Games from companies such as Ubisoft (UBSFY - Free Report) and Telltale Games will be available. However higher profile developers, such as Electronic Arts (EA - Free Report) and Activision (ATVI - Free Report) , will be missing.
The incentive is a double-edged sword, as Amazon will get a 25% cut of content sold and the streamer, who is the person playing the game, will get a 5% cut.
Amazon views this platform as a way to compete with game consoles such as Microsoft’s (MSFT - Free Report) Xbox and Sony’s (SNE - Free Report) PlayStation. However, the prominent revenue stream for PC games is different than consoles. On PCs, leading revenue is generated from game features rather than the game itself. Features include add-ons which enhance gaming experience.
Twitch’s vice president of commerce, Matt McCloskey, hopes the site’s 10 million daily viewers will be encouraged to purchase content while viewing their favorite gamers play. He stated, “Ultimately, the principle is if you can watch it on Twitch, you can buy it on Twitch.”
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