Another day, another billion dollar acquisition. Amazon has made transparent its rumoured intent to get into video entertainment with the acquisition of Twitch, a live streaming service.
The deal, actually worth $US 970 million was announced earlier today. Google was apparently also interested in the company at one stage, and by some accounts at a higher valuation.
Having established itself downstream with devices like Kindle, FirePhone and FireTV, Amazon has been paddling upstream to content, with recent acquisitions of games and comics platforms.
For much of this year there have been suggestions that Amazon was in discussions to acquire rights to content and evidently to invest in content for TV. Now it has the means to stream content, Amazon looks like a serious player in entertainment.
A critical advantage fort Amazon is its ability to bundle offerings in ways that take advantage of its existing cloud-based functions to bundle and upsell content across the range of its transactions and subscriptions.
Like Netflix, Amazon has great capacity to analyse and prompt content interests, but with Twitch it can also stream live TV.
We can’t know exactly, but it’s a safe bet that Amazon wants to enable Netflix and other services through FireTV while offering its own payTV bundles via Twitch.
For players that don’t own content – local payTV operators like Foxtel in Australia – are likely to face an abrupt disruptor. And if the prices are low then we can also assume that free to air TV will have serious problems.
With 250 million active users – people who are paying for something – Amazon has a substantial base from which to launch paid content. If it achieves good momentum, the obvious potential is to power up with bids for key content rights – like sports – putting it head to head with the incumbents.
It’s no wonder that Rupert Murdoch thought now was the time to try to lock up two of the biggest global entertainment and content producers. But if Amazon’s play gets to maturity, both Fox and Time Warner have serious value to lose.