Amazon has reached a deal with live-streaming gaming network Twitch Interactive for about $970 million in cash, according to a report by Reuters.
The move was announced by the two companies late last night (Aug. 25) and is the largest deal in in Amazon's 20-year history.
The deal is expected to help the U.S. e-commerce company compete with Google and Apple in the world of online gaming, which currently accounts for more than 75 percent of all mobile app sales.
Amazon's purchase involves some retention agreement that push the deal over $1 billion, a source said to Reuters.
"Twitch will further push Amazon into the gaming community while also helping it with video and advertising," Macquarie Research analyst Ben Schachter said in a note.
Twitch's format allows viewers to message players and each other during live play. It is garnering interest as one of the fastest-growing segments of digital video streaming, which is attracting more advertising dollars.
The deal should close in the second half of this year. It is an unusual step for Amazon, which usually builds from within or makes smaller purchases to compete with rivals.
Google was previously in talks to buy Twich, which launched a little more than three years ago, one person said regarding the deal, according to Reuters.
"The reason why we reached out to Amazon, the reason I thought working for Amazon, having Twitch being a part of Amazon, would be a great idea for us (because) they would give us the resources to pursue these things that we honestly already want to pursue and they'd let us do it faster," Twitch Chief Executive Officer Emmett Shear said, according to Reuters.
Ethan Kurzweil, a partner at Bessemer Ventures, which has backed Twitch for a long time now, said Amazon's knowledge in developer platforms through Amazon Web Services provided it a window into Twitch's potential growth.
"They understand the power of engaged developer platforms," he added, according to Reuters.
Twitch's social networking features allow viewers to communicate with other viewers and the featured gamer during broadcasts. Video games are among the most popular content on YouTube, the world's No. 1 video website, which is owned by Google.
Twitch raised $20 million in funding in September from Thrive Cpaital, WestSummit Capital and Take-Two Interactive Software Inc, among other parties, according to Reuters.
Twitch launched back in June 2011 as Justin.tv. It has since grown from 3.2 million unique viewers each month to 45 million.
The average Twitch viewer watches 106 minutes of the platform's video game live streams daily, while around 58 percent of viewers spend 20-plus hours a week watching Twitch videos, according to company data cited by the L.A. Times.
Twitch and Amazon have not disclosed details on new retail opportunities for Amazon through Twitch's network of gamers however.
"We have lots of ideas we've discussed, there's a lot of interest and a number of things we can pursue," said Michael Frazzini, VP of Amazon Games, according to Reuters.
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