A New Era For Twitch?

This spring sees Twitch move into new territory, as the Amazon-owned game streaming site begins to sell games through its online platform. What will this move mean for the company, and how is it likely to affect the evolving game space?

New Horizons

via GIPHY

The venture makes good commercial sense in light of the sheer variety of games being streamed on the site these days. Almost all conceivable video game genres are represented. High-tech team-based shoot-em-ups like Call of Duty and sci-fi extravaganza Destiny rub shoulders with fantasy RPGs like World of Warcraft. 

With that many regular viewers, and that many regular streamers covering such a broad spectrum of games, it would seem a little churlish for Twitch to sit on the sidelines of its own party rather than join in with the fun.

A Short History of Twitch

It’s worth bearing in mind that Twitch has only been Twitch for six years or so. It originally came about as a spin-off project for Justin.tv, a general-content media streaming platform founded in 2007 by Justin Kan and Emmett Shear. They soon realized that they would need a separate channel set up specifically to handle gaming content and then it became readily apparent that there was more gaming media out there than a mere channel could accommodate. Thus, on June 6th 2011, Twitch.tv entered public beta as a standalone game-streaming site. The parent company rebranded to Twitch Interactive in February 2014, at about the same time the famous Twitch Plays Pokémon stream went viral.

This event, billed as a spontaneous crowd-sourcing experiment, attracted over 36 million views. The Justin.tv site faded from the Internet two months later, with public and press attention focused firmly now upon Twitch and the excitement it was generating.

Following interest from Google, Twitch was acquired by Amazon two months after the Pokémon experiment proved beyond the shadow of doubt that game streaming had a promising commercial future.

The Amazon Connection

In many respects, this move shouldn’t come as much of a surprise to anyone who’s kept a passing eye on the activities of parent company Amazon. Amazon is one of the five top tech companies which are collectively known on the stock market as FAMGA (Facebook, Apple, Microsoft, Google, and Amazon). Between them, these modern-day titans of industry make up a whopping 38.9% of the total market cap of the NASDAQ 100 as of last year.

As such, Amazon is caught in lockstep with the others, as the various different media platforms and sectors merge and coalesce. In the field of streaming film and TV media content, Amazon has reached an uneasy impasse against the market reach of Netflix – it has as much of that market as it is likely to get, and when the wriggle room gets tight, it can sometimes be smart to move sideways. Using the Twitch.tv platform to retail video games is by far the easiest way into a new market for the company. Half the tech architecture is in place already, which makes the process of entering the gaming market tidier and considerably less costly than setting everything up from scratch.

How the Service Works

Some 50 game titles have been lined up for the platform so far, from developers including Ubisoft, Telltale Games (the folks behind the Walking Dead game series) and Digital Extremes. Popular games available for download include Psychonauts and For Honor. In-game content is also featured, and Twitch Crate rewards dispensed to any game purchase that costs $4.99 or more. Games are downloaded and played through the Twitch launcher, which previously has seen use to assist Twitch Prime customers in redeeming their games and loot codes. Additional download options are catered for too, so gamers can elect to download and play the games through existing developers/publishers, including Uplay.

Developers earn a 70% share of the revenue, and Twitch-affiliate partner streams are encouraged to earn a 5% commission rate through promoting game sales by way of their channel pages. The overall aim of this exercise is to incentivize Twitch streamers into becoming a marketing force for Twitch the game retailer. Given how effective social media marketing is proving to be, it will probably work like a dream, and serve to broaden choice in a download marketplace currently occupied by two heavy hitters: Valve and Steam.

The Twist in the Tail

A three-way battle looks likely to ensue, but Twitch comes with built-in advantages that are sure to come in handy, and a customer metric that is both content generator and content distributor, sharer and buyer.

In the shade of the new overlap between these merging forms, Amazon/Twitch have spotted what they think to be a marketable space akin to that hitherto occupied by Facebook; a social media platform built around gaming, where the gamers themselves provide the key elements of market and marketers. If what Amazon have struck upon here is indeed the Ouroboros serpent it so appears to be, then the tail is liable to be twitching comfortably for quite some time…