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Summary

  • Amazon announced that it has reached an agreement to acquire Twitch Interactive, Inc. for just under $1 billion.
  • Last month Twitch saw over 50 million unique visitors produced by more than 1 million broadcasters; a drop in the bucket considering 67% of US households alone play video games.
  • This deal strengthens my thesis that Amazon will compete with anyone; no one is immune to Amazon's reach.

Amazon.com, Inc. (NASDAQ:AMZN) has done it again. That's right, the online retailer has made announced that it is making yet another significant acquisition. It seems as if large companies have been on a shopping spree of late, and Amazon is securing its piece of the pie. So what is the new deal all about? Well, Amazon announced on Aug 25th, 2014 that it has reached an agreement to acquire a company known as Twitch Interactive, Inc. Twitch Interactive is known to be among the most popular platform that relies on live video actions for consumers that utilize video games. This deal follows two other digital company acquisitions that Amazon has made since 2012. Other key deals you may recall include comiXology for digital comic books and graphic novels as well as the book recommendation site Goodreads. But Twitch is a very unique niche that is helping Amazon secure a place in yet another market.

In my article in December, I opined that Amazon would seek to compete with everyone, over just about everything. The crux of that article at that time was that Amazon would seek to compete with Costco (NASDAQ:COST) and sell warehouse goods under its Pantry line. I think the present acquisition serves to support to my opinion that no retailer was safe from Amazon's growth and desire to be a global powerhouse, whether they be brick and mortar competitors, online competitors or in this case, niche plays. In that article, I also argued that Amazon could fit niche plays well, including competing with large warehouses, and now here in the gaming space. It is not an insignificant purchase. The company will pick up all outstanding shares of Twitch for just under a $1 billion (the final price will change based on options and other items) Now this deal should close later this year, giving Amazon and its marketplace sellers access to all of the users of the site.

And that is why this deal may be a good move. Last month over 50 million individual site visitors accessed about 15 billion minutes of content on Twitch. This content was made by over 1 million users, which include gamers, professional video game players, content publishers, software developers, gaming and media outlets, among others. Twitch is only in its infancy, founded in 2011. To have grown to have 55 million plus visitors in a month and over a million users uploading content, the growth is impressive. But the growth potential is amazing. In 2010, in the US alone, 67% of all household played video games, and the average gamer spent 8 hours per week playing. Extrapolate this globally, and the market is barely being scratched. This acquisition adds to my thesis that Amazon refuses to be out-competed. This move will keep many gamers under their umbrella, filling yet another niche and further reinforcing my opinion that no retailer is safe. Perhaps, this opinion should be now clarified to state that no business is safe from Amazon's reach. Given this acquisition, I maintain my buy rating on shares, because the present deal is just another piece of the pie that Amazon has its hands on.

Source: Update: Amazon's Latest Acquisition Strengthens My Thesis That No Retailer Is Safe