Amazon.com, Inc. (NASDAQ:AMZN) purchased the live streaming gaming website Twitch yesterday for $970 million in a move that has prompted mixed reactions among both analysts and Twitch users. The deal was discussed on Yahoo Finance this morning, with uncertainty over its motives and implications.
“Twitch is important to Amazon because it opens up a new space for them. They obviously have been moving into this media space, this streaming space. This actually could put them somewhere closer to building up the capability for example to move into live television with the infrastructure that Twitch brings to them,” said Gina Sanchez of Chantico Global.
Sanchez added that while Amazon.com, Inc. (NASDAQ:AMZN)’s purchase brings them some 50 million gamers who use the game streaming platform, they’re likely more interested in the bigger picture of how the platform and its infrastructure could contribute to even bigger video streaming plans.
In that sense the purchase is completely different from Google Inc (NASDAQ:GOOGL)’s rumored attempt to purchase Twitch earlier this year before they apparently got cold feet over antitrust concerns. Where they were seen as being primarily after the users and demographic that Twitch would provide, Amazon.com, Inc. (NASDAQ:AMZN)’s ultimate play is still somewhat of a mystery, and the Twitch purchase doesn’t seem to line up as neatly for them as it would have for Google.
It’s also unclear just what effect the acquisition will have on improving Amazon.com, Inc. (NASDAQ:AMZN)’s bottom line. Their stock is “technically damaged” according to Todd Gordon of tradinganalysis.com, and Twitch (with rumored revenue of about $75 million) does nothing to improve the massive gap between their revenue and profit, also described as the “Amazon Gap”.
Generation Investment Management, a hedge fund managed by David Blood and former Vice President Al Gore, is a major shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 493,047 shares in the online retailer.
Disclosure: none
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