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With Twitch acquisition, is Amazon taking on YouTube?

Amazon announced Monday that it had acquired video game streaming service Twitch for nearly $1 billion. 

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Heinz-Peter Bader/Reuters
Amazon is currently involved in disputes with publishers Hachette and Bonnier Group.

Amazon will buy video game streaming service Twitch for around $970 million in cash.

News of a possible deal surfaced earlier on Monday, with expectation that the online retailer would likely acquire the Internet streaming company. 

Google had previously been in talks to acquire Twitch. Yahoo was reportedly also interested. 

Amazon has been continually expanding its operations into a wide variety of goods and services yet still struggles to turn a profit, which has proved upsetting to investors. Recent Amazon expansions include Kindle Unlimited, a service announced last month that grants users access to thousands of e-books and digital audiobooks for $9.99 a month, and the Fire Phone, Amazon's bid to enter the already heavily saturated smart phone market. 

And with this most recent acquisition, Amazon positions itself squarely on top of the budding video-streaming market. 

Launched in 2011, Twitch had more than 55 million unique visitors last month and more than 15 billion minutes of video that was created by more than 1 million users, according to an Amazon release. Considered to be the most popular place to watch content from gamers, Twitch accounted for 2 percent of peak US Internet traffic in February, The Wall Street Journal reports. Last September, Twitch raised $20 million in a round of funding. 

"Broadcasting and watching gameplay is a global phenomenon and Twitch has built a platform that brings together tens of millions of people who watch billions of minutes of games each month – from The International [an annual tournament for the multiplayer game Dota 2], to breaking the world record for Mario [the Nintendo classic], to gaming conferences like E3 [the industry's big convention]. And, amazingly, Twitch is only three years old," says Amazon chief executive Jeff Bezos in the release. 

In a letter, Twitch chief executive Emmett Shear noted that Twitch would continue to function more or less autonomously, despite its new owner. 

"We’re keeping most everything the same: our office, our employees, our brand, and most importantly our independence. But with Amazon’s support we’ll have the resources to bring you an even better Twitch," Mr. Shear writes in the letter.  

While Amazon is no stranger to video-streaming content – evidenced by its vast swath of TV and movie content available to its Prime members – this acquisition marks a foray for the tech giant into the realm of user-generated content. But, despite the advertising in Twitch's videos and the revenue from subscribers, user-generated content has typically proved harder to monetize than professional content, which means the Amazon trend of investors waiting to see any significant returns will likely continue, Re/Code posits. 

Tech website The Information reported news of the acquisition earlier in the day on Monday. 

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