What Does Amazon Gain from the Twitch Deal?

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Aug. 26 (Bloomberg) -- Kotaku.com Editor-In-Chief Stephen Totilo and Bloomberg’s Paul Kedrosky examine Amazon buying Twitch for nine hundred seventy million dollars and the video game industry. They speak with Erik Schatzker and Alix Steel on “Market Makers.” (Source: Bloomberg)

A video gaming site and our contributing editor paul kedrosky.

You have got to break this down for me.

I am going to go on twitch and watch other people play games and that will make me want to spend money and stay there for hours.

That is half the story.

I heard you talking earlier -- it is a little bit like watching people play sports.

It is interactive as well.

If you are watching on twitch, you can chat.

You can ask the people watching -- playing the game to do things for you.

It is not like tv, not like movies.

People like that.

It feels more alive.

What is the number one thing amazon gets out of this deal?

Cheap content and traffic.

They are not paying people to generate this traffic per se.

You have people watching some gamers playing"starcraft" or what ever else -- playing "starcraft" or whatever else.

These people are playing of their own galician.

And -- playing of their own volition.

And when you wrap around it, you have pretty inexpensive content generating meaningful content -- traffic.

On one hand amazon is an e-commerce company.

We all know it for that.

On the other, amazon is a cloud company.

Amazon web services.

On the surface, there does not seem to be much relationship between the e-commerce heart of amazon or the web services part of amazon and twitch.

It is a cloud service, right?

In a sense you can think of twitch as yet another cloud service driving digital content am a weather as a subscription service or potentially driving content.

It is a push outside what we have typically thought of them as doing, but it is not a surprise.

I am not surprised in terms of strategic drift at all.

I like it as opposed to their spending on content creation and terminal a. it is much less expensive.

I preferred this to that kind of spending immensely.

In large part because the content creates itself and is very inexpensive.

We have seen -- youtube is a phenomenal example.

What that can produce.

As a digital bennison, what would you rather have seen, amazon by -- as a digital denizen, what would you have rather seen, amazon or google buy twitch?

Amazon is getting into gaming.

This is not as much of a left turn as you might think.

They are getting more and more of the mind share of the gamer and that is a relevant market.

Paul, will the markets, sure, but what do you make of the valuation?

Is it worth it?

I was just looking this morning.

Putting something like the hide $35 million back in 2011 -- this is a stunning exit for the investors.

I wish i was on that side of the transaction.

Turning around, look at the riddance is him google faced when it made acquisitions.

-- look at the criticism to go faced when it made acquisitions.

Cheap content is very compelling.

People remain inordinately skeptical of the economics of those businesses, but google demonstrated with youtube they can be very effective.

Let's say there is a compelling news sports network on par with espn, albeit on a smaller scale.

A billion-dollar valuation, if not cheap, it will look appropriately priced.

How much do we know about the economics of twitch?

I assume you know something about it, but google and youtube seems like it would be a good comparison if twitch turns into a phenomenal home run for amazon.

But if it is a makers studios, the jury is still out whether that will be a good deal for disney.

There is advertising if you are not a premium member of the service.

You do also have publishers, game publishers very interested in having their games featured -- it is a genuine platform?

And you have it on xbox and playstation.

It is all over the place.

Is it 80's of church and model?

You do not have to watch the ads.

I do not know if that is enough value to offer to someone.

They do not create a lot of original content.

There is not a whole lot you can charge the bull for.

They are somewhat old into the gamers.

Google could steal people away.

Is there an opportunity here?

Does amazon owning twitch help the console or the content companies in the gaming world, the take-two interactives, the sonys, the microsofts?

This is an inexorable force.

Gaming is becoming more social.

The days of people in their basements with chip bags on their bellies is ending.

It is transforming the industry, making it more social and more interactive.

The old knocks against gaming, that fundamentally it was very antisocial and a very narrow, those are all going away.

And they're talking about the physiology of these -- they are truly a sports, with hundred of actions per minute required to compete at the highest levels and games like "starcraft." being able to comments in real-time is like having using

This text has been automatically generated. It may not be 100% accurate.

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