Peter Kafka and Eric Johnson, reporting for Recode:
Amazon is buying videogame streaming site Twitch for more than $1 billion to edge past Netflix and Youtube in a race for younger viewers, according to a source.
Google had been in talks to acquire the company, but that deal died, according to the source. Amazon then entered the picture and completed what is one of its biggest acquisitions to date, this person said.
For the uninitiated, Twitch is a platform for making and talking about videos of videogame play. About a million users a month record themselves playing videogames, while the rest — pegged at 50 million unique viewers in July — watch and comment on the videos. In January, Twitch reported that 58 percent of its viewers spent more than 20 hours per week on the site.
The future of TV is online streaming, not traditional “channels” that come through cable or satellite. It occurs to me that Google’s 2006 purchase of YouTube for $1.65 billion has proven to be one of the smartest and most important acquisitions of the Internet era. My son and his friends watch far more YouTube content than they do traditional TV. Cable TV is dying.
The median age of people watching broadcast networks is 60. The median age for Fox News is 68. That increased almost 2 years over the course of one – suggesting that FOX is not attracting younger viewers.
So what are the younger people doing if not watching TV? Streaming video on demand is one of them. They can watch virtually anything online. And if it is not online, it is probably not worth watching.
Netflix is producing great things to watch. At anytime you want. without having to wait weeks to see each episode. Twitch is another novel entertainment solution. I would not expect watching video games played by others to be big but it is.
Heck, even the Emmy broadcast last night made fun of this, with jokes about how many awards Netflix was garnering. Very few of the class programs, from Game of Thrones to Breaking Bad to True Detective or Fargo have to be shown on TV.
Especially as costs drop and disruption accelerates. Netflix makes money of programs like House of Cards if it is able to keep just a few hundred thousand people paying.
I get to watch a lot free video at Amazon if I have a Prime Account (closing in on $100 a year). If HBO had a streaming service apart from cable, would they make more money? There are a ton of hits to get HBO without cable.
$1 billion may be chump change as things progress.