Earlier this week, Amazon made the largest acquisition in the company’s history when it purchased video game streaming website Twitch for $970 million. Because video game streaming has yet to go fully mainstream, the deal has left a lot of people scratching their heads - and, in response, almost every news outlet has decided to offertheirownexplanation.
We wanted to jump in and offer our two cents on what the acquisition means from a digital marketing perspective. For the completely unfamiliar, here’s a crash course on what Twitch is, where the acquisition could take it and how this new form of high-engagement user-generated content will matter for the future of digital marketing.
At its most basic, Twitch is a platform that allows people to watch other people play video games. It’s enormously popular, averaging 567,000 viewers during prime-time - that’s 7,000 above MTV’s numbers and just below Comedy Central’s.
Twitch streams fall into two broad categories: to draw a parallel with existing media, we’ll call them “Super Bowls” and “hobby shows.” Super Bowls are major gaming tournaments that attract enormous audiences - The International, one of the gaming’s largest tournaments, had a 2014 prize pool of $11 million and brought in 20 million viewers on Twitch. Hobby shows, by contrast, are more like Emeril Live or Car Talk. They attract smaller niche audiences that are both interested in learning about the hobby and also entertained by the specific personality hosting the show. Twitch has thousands of these hobby shows, each focused on a different aspect of gaming culture and hosted by a unique personality.
In addition to live video, Twitch also provides a chat room for everyone watching the game that runs alongside the show. This is what makes it stand out from traditional television - the chat function creates more engaged audiences by encouraging viewers to interact in real time with both the streamer and other viewers. This reduces viewers’ available bandwidth, making it difficult to zone out and thumb through Twitter while watching.
Where It’s Going
Amazon now owns the main distribution network for gaming Super Bowls - not bad in and of itself. But the real synergy between the two companies lies in Amazon’s ability to extend Twitch’s hobby show format across all its products. Tom Standish, the Economist’s Digital Editor, gave an example of how that might work on the newspaper’s Babbage blog this week:
“From my perspective, I go over to Twitch because there’s a new game out and I want to see what it’s like… I’m probably quite interested in buying this game… (and now) Amazon can just put a ‘buy’ button, right there, underneath the video. So one way you can think about this is that Amazon has just bought access to millions of user-generated adverts for games.”
Mr. Standish uses Twitch hobby shows - or, as he calls, them, “user-generated adverts” - as a way to vet products he’s considering purchasing. In that way, they function very much like Amazon’s user reviews, but with added benefit of offering entertainment value.
The capabilities provided by Twitch allow Amazon to bridge the divide between their core retail business and their nascent online video services, allowing both sides to direct users closer to purchases. Instead of watching cooking shows on network television, Amazon hopes that potential customers will instead visit its new streaming video service (let’s call it something like “Kindle Live”) and watch a cooking show there instead.
If the hypothetical Kindle Live can incorporate ‘buy’ buttons for the items being used on its new user-generated hobby shows, that will surely create a lot of sales - especially if users perceive the buttons not as ads but as helpful shortcuts that make it easier to emulate their favorite streamers. Imagine a customer watching their favorite home improvement Kindle Live stream, asking the host a few questions about the tool they’re using in the chat room, and then adding the tool to their Amazon cart by simply clicking on it in the stream. It’s not possible yet, but that sort of potential is the real value Twitch adds for Amazon.
Getting Ready for Live Stream Marketing
If you’re a digital marketer and had never heard of Twitch before this week, don't worry - right now, it’s really only relevant for gaming demographics. But now that Amazon owns the company, that will likely change soon. Expect Amazon to make a big push over the next few years to expand Twitch’s trademark high-engagement user-generated content into other industries. A solid plan for this new medium will include “streamer relations” similar to existing social media influencer relations strategies, smart ideas for pre-roll stream advertisements, tactics for participating in stream chat and an understanding of the informal categories of Twitch-type streams (which, as we’ve seen, really aren’t all that different from traditional broadcast media).
Twitch is more than just a platform for game streaming - it’s a new digital media format that’s about to get a huge boost and a new monetization strategy from one of the largest companies in the world. If you haven’t studied it yet, it’s worth doing some research so you’re prepared for the arrival of Twitch-type content in your industry - even if that arrival is a few years off.
Zach Pearson is an Account Executive - Content at Greenough. Follow him on Twitter: @zach_p_pearson