Why Amazon flipped the switch on Twitch

When it launched, Amazon.com was media (a website) being used to sell media (books) in a way that other media, like catalogs and home shopping channels, could not match. Since then, Amazon has gone on to sell just about anything that can be shipped and has diversified into businesses such as wholesale cloud storage. However, over the years it has continued to understand the power of using media to help sell and has picked up directory and review sites such as IMDB and GoodReads.

Those sites were small (and different) potatoes compared to Twitch, the giant videogame streaming site that Amazon swooped in and stole from the hands of Google for a billion dollars. Twitch apparently said yes to Amazon after it couldn’t come to terms with Google on a break-up fee.

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But to Google, Twitch would have been just another pair of eyeballs against which to sell advertising, a complement to YouTube. To Amazon, it is much more strategic. Like the readers on GoodReads, the movie buffs who frequent IMDB, and the photography enthusiasts who visit Digital Photography Review, which Amazon acquired in 2007, those who post and watch streaming game videos on Twitch represent gamers with a level of passion.

And Amazon needs passionate gamers and games to sell to them. Amazon is now scrambling to develop legitimacy in games. So far, through its Amazon Game Studios, it has developed a handful of titles based on variations of games popular in Google and Apple’s app stores. But of course, it knows it needs to invest in  killer titles that highlight Amazon’s devices. An early step in the right direction is To-Fu Fury, which takes advantage of Dynamic Perspective that allows the player to preview obstacles around corners. It’s a tricky concept to describe in words, but an easy one to show being played on Twitch.

The timing, if not ideal, is par for Amazon’s course. The Internet retailer has long trumpeted the strength of its content ecosystem, but all the pieces to support certain devices are still a puzzle: The first Kindle was criticized for its poor selection of e-books. The Amazon app store was immature at the launch of the first Kindle Fire. Even today, despite Amazon investing in original video programming, Prime Instant Video trails the selection of Netflix significantly.

As Amazon bolsters its play in other media, games are not just another content checkbox. They are the most important category for an app store by far. And it’s not just key to Amazon’s phone and tablet, but the most important content differentiator for its living room play — especially as Google steps up the competition with Google TV.

In the broader console world, Twitch has been able to navigate the political waters and play well with both Microsoft and Sony. Integrating Twitch into Amazon’s devices will help the $99 Fire TV achieve more of an aura of legitimacy in the console market, as well as help it to cross into the world of more expensive and more sophisticated home entertainment systems. It seems that while Amazon’s latest acquisition may have been purchased in a twitch, the company makes considered, deliberate moves.