SAN FRANCISCO/LOS ANGELES - Amazon.com Inc tracked Twitch's evolution from scrappy guerrilla startup to one of the Internet's hottest media properties. On Monday, it announced a near-$1 billion acquisition to get into one of the fastest-growing online arenas: live-streaming.
Amazon's $970 million bet - its largest ever - underscores how a loyal and fast-growing following for live-streaming has grabbed the attention of big brands. Some believe live and interactive streaming, in which Twitch is a pioneer, is the new frontier in online video.
Bessemer Ventures' Ethan Kurzweil admitted on Monday he got blank stares from people he described Twitch to initially. The San Francisco-based startup lets gamers livecast their play while responding to cheers, tips and random musings from online viewers in real time.
In three years, Twitch has become the fourth largest US producer of peak Internet traffic, ahead of Facebook and Hulu, according to Bessemer, a backer. "It's a captive audience and one that is loyal," said Adam Shlachter, head of media activation at marketing agency DigitasLBi.
"Where you have like-minded people..all aggregated in one place, kind of holed up around the same thing and participating in the same experiences, that offers a really unique environment to target (ads) against."
Live-streaming draws a following partly because of its immediacy: fans message their favourite personalities and can evoke a response during livecasts. Twitch and other live-stream networks like Livestream also cater to niches, featuring content such as offbeat sports to videogames that mainstream outlets eschew.
Twitch had 55 million monthly viewers in July, up about 45 per cent from a year earlier. That growth caught the attention of advertisers, who spotted the chance to reach younger viewers who watch less television.
Brands will spend $6 billion this year on digital video advertising in the United States, according to research firm eMarketer. Live events are appealing to advertisers because audiences can't skip commercials.
Most of Twitch's thousands of livecasters are simply gamers. Some boast a following of hundreds of thousands and earn a cut of ad revenue from the likes of PepsiCo's Mountain Dew and Time Warner Inc's Warner Bros.
YouTube, whose parent Google Inc was in talks to buy Twitch, streams some events live but most of its videos are recorded. On live platforms like Twitch, ads appear as a user opens a stream or when livecasters take a break. "Interacting with celebrities and artists is a growing trend," said Max Haot, chief executive of Livestream.