Sunday, August 31, 2014

Buying Internet Real Estate

As always, bigger players are gobbling smaller players.

... Amazon believes it’s a $1.1 billion thing. Last Monday, the company announced it would buy Twitch, which surprised most industry observers because they thought Google had wrapped up a purchase. ...

Twitch has built a platform that hosts live events akin to the N.F.L., the United States Open or the X Games — and it has the audience to show for it. Part of the magic is that on Twitch, you are not just watching other gamers, but hyper-talented digital warriors, the Peyton Mannings and Roger Federers of Counter-Strike and Minecraft.

From a standing start in 2011, Twitch garnered 55 million unique users in July who watched 155 billion minutes of gaming and has become the country’s fourth-largest user of Internet bandwidth. ... The economics of Twitch are compelling partly because it supplies its own content and audience, comparable to an oven that produces its own food. ...

Amazon desires Twitch TV because it encompasses a demographic Amazon doesn't have. To date, Amazon has had minimal luck breaking into the internet TV show business because it hasn't clicked with the content it's so far developed and Netflix (apparently) has mastered the infrastructure better than Amazon. All that could change, of course, but Amazon is now going in a new direction -- purchasing a website that features interactive animated product.

Maybe the buy will end up being a genius move for the Big Retailer, leading to more eyeballs, more customers, and more kinds of content. Or maybe it will be an economic bust. In the fullness of time, we'll likely know which it is.


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