Amazon's Twitch to Sell Video Games on Streaming Site

  • Move pushes e-commerce giant deeper into $100 billion industry
  • Add-ons for free games expected to be the biggest sellers

Amazon.com Inc.’s video-game streaming site Twitch Interactive will begin selling games and features in the coming months, furthering its evolution from an online gathering spot for enthusiasts into a commerce hub for the $100 billion industry.

Twitch streams competitions featuring professional gamers, letting viewers chat alongside the action, react with emojis and pose questions. The site now will let its 10 million daily viewers download games and game features such as characters, weapons and tools while they watch their favorite streamers.

Twitch viewers will be inspired to download games and purchase features while watching their favorite players use them, said Matt McCloskey, Twitch’s vice president of commerce, a new position created in November. It’s similar to a basketball fan buying a pair of Nike sneakers from the LeBron James collection after watching the Cleveland Cavaliers star hit a game-winning shot. If video game fans see something they like on Twitch, they should be able to purchase it at that moment, McCloskey said.

“We’re playing with the idea of social commerce, because Twitch is a social platform,” said McCloskey, who spent 18 years working on video games with Microsoft. “Ultimately, the principle is if you can watch it on Twitch, you can buy it on Twitch.”

Twitch, which is free to watch, generates revenue from selling advertising and subscriptions. Subscribers pay $5 a month per channel to interact with their favorite streamers in chat rooms and get access to emoticons that are a popular method of communicating on the fast-moving site.

Selling features on Twitch will be popular with game developers because it will help them “convert free players into paying players,” said Michael Pachter, analyst at Wedbush Securities Inc. For example, League of Legends maker Riot Games Inc. pulls in more than $1 billion a year by selling features for the popular free game, he said. That is the leading revenue model for games played on personal computers and mobile devices, compared with games purchased for use on consoles such as Microsoft Corp.’s Xbox and Sony Corp.’s PlayStation.

The moves integrate Twitch further with its online retailing parent Amazon, which purchased the streaming site for about $1 billion in 2014. Amazon, which has its own video game division, sees the platform as a gateway to the market to rival Microsoft and Sony. The company’s cloud-computing division Amazon Web Services is also introducing new tools for game developers to host multiplayer online games with speedy connections.

In September, Twitch announced some of its video-game streaming services would be included in Amazon’s $99-a-year Prime membership, which also includes delivery discounts and video and music streaming. That move sought to introduce more Prime members, including families with children, to Twitch. The streaming site has expanded beyond gaming by adding cooking shows and art classes from some of its 2 million-plus streamers, suggesting other retail categories could be coming to the platform.

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