ON OCTOBER 4th 2013, tens of thousands of gamers packed the Staples Centre in Los Angeles to watch SK Telecom T1 triumph over Royal Club in the annual finals of “League of Legends”, a team-based video game; 32m people watched the games live at some point, about 50% more than watch “Sunday Night Football”. But they did not watch on television. They used Twitch.tv, a website founded in 2011 that streams live video directly to users’ computers.
On August 25th Amazon announced that it would buy Twitch for $970m, an indication of the growing importance of video-streaming websites. Amazon was not the only one interested: a few months ago Google had been rumoured to be on the verge of offering $1 billion for the firm as well.
Video-streaming websites are not new. Twitch.tv was spun out of Justin.tv, a site set up in 2007 to allow Justin Kan, one of its founders, to broadcast his life to anyone who was interested. Soon, everyone could use it, letting them make television shows with nothing more expensive than a webcam and a computer.
It is the combination of streaming and video games that has attracted Amazon’s interest. Gaming became the most popular genre on Justin.tv, and Twitch was created to appeal to players. Viewers watch people play competitively, give advice on how to improve, or simply discuss anything that takes their fancy. The best streamers earn a comfortable living from advertising revenue and donations from fans.
In July Twitch attracted 55m viewers, who collectively watched 15 billion minutes of video. That was enough to make it the biggest consumer of bandwidth in America after Netflix, Google and Apple. The typical Twitch viewer spends almost two hours a day on the site, far more than on sites like Netflix or YouTube. That delights advertisers, as does Twitch’s audience: mostly young men with plenty of disposable income.
Amazon’s boss, Jeff Bezos, presumably thinks Twitch’s breakneck growth will continue. He is paying nearly four times what he forked out for the Washington Post in 2013. But he will need to tread carefully. Twitch’s users like the site’s free-and-easy feel. Some worry that absorption into the Amazonian mother ship may not be compatible with a laid-back atmosphere. But if Amazon starts making changes (and Twitch’s founders have promised that it won’t), there is little to stop streamers and viewers defecting to rival sites such as Hitbox.
This article appeared in the Business section of the print edition under the headline "Streaming down the Amazon"
