Amazon has agreed to buy video game live-streaming website Twitch for $970 million, the companies announced Monday.
Twitch has become a popular online destination for video game players, who use the website to stream live gameplay of titles across a variety of consoles and formats. More than 55 million unique visitors viewed content generated by more than 1 million broadcasters on the site in July 2014.
It had been widely reported that Google was in talks to buy Twitch for about $1 billion, until Amazon’s surprise announcement. “We chose Amazon because they believe in our community, they share our values and long-term vision, and they want to help us get there faster,” said Twitch CEO Emmett Shear in a statement. Twitch will continue to operate as an independent brand from Amazon, he said.
The acquisition is the latest sign that Amazon is serious about becoming a big player in the worlds of both gaming and online video. The retail giant snapped up the video game developer Double Helix Games earlier this year, and the company’s new set-top box, the Amazon Fire TV, boasts a bevy of Android-based games and a traditional video game controller as a main selling point.
“Like Twitch, we obsess over customers and like to think differently, and we look forward to learning from them and helping them move even faster to build new services for the gaming community,” Amazon CEO Jeff Bezos said in a statement.
More important than gaming though will be the foothold Twitch grants Amazon in the world of online video. As a rapidly growing video site that has generated more web traffic than Facebook and Hulu in past months, Twitch will give Amazon greater scale to compete for ad dollars with the Google-owned YouTube, the world’s biggest online video destination by far. Amazon has already been experimenting with pre-roll ads for episodes of some of its original shows. Now the company will have access to millions of additional video watchers between the ages of 18 to 34, a highly coveted demographic on Madison Avenue. “This is really interesting addition and a way to bring Amazon’s brand to that community in a way that they really haven’t been able to before,” says Brian Blau, research director at Gartner.
For Twitch, the purchase is proof that courting a niche demographic can pay off. Twitch began in 2011 as an offshoot of Justin.tv, a more broadly focused live-streaming platform. Shear and his colleagues realized that people were using Justin.tv to livestream gameplay of hits like StarCraft 2. “Watching and sharing in that experience is as much a part of video games as playing is,” Shear told TIME earlier this year. He was proven right—Twitch is now one of the biggest sites on the Web and Justin.tv shut down earlier this month.
But Twitch’s ambitions likely extend beyond gaming. This summer the company began experimenting with live streams of music concerts. Amazon’s long-term aim, Blau says, could be to develop Twitch into a “live version of YouTube.” Such an evolution, though, would require buy-in from Twitch’s fickle user base of passionate gamers.