This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why Amazon's Deal for Twitch Is About Attacking Google's YouTube

NEW YORK (TheStreet) – Amazon (AMZN - Get Report)  decided a pick off a company called Twitch, which streams video of people playing games.

Given the sometimes impulsive nature of CEO Jeff Bezos, Twitch should fit right in but not for the reasons that you think.

As Bezos put it, "Broadcasting and watching gameplay is a global phenomenon." And he's right. Until three years ago, this industry, which is sometimes referred to as "video in video games," didn't exist. Now it's a billion-dollar business.

Investors applauded the deal, and Amazon shares rose 0.73% in the wake of its announcement. The stock closed Monday at $334.02. Still, Amazon's shares have a way to go to recover from their selloff earlier this year. They're still down more than 16% on the year to date.

Bezos realizes Wall Street no longer drools at his "growth at all cost" mentality. Investors still wonder whether Twitch, which has more than 1 million active broadcasters per month, can be the answer to Amazon's profit woes? I think it can.

Let's not forget that Google (GOOGL) has turned YouTube, for which it paid $1.65 billion, into a lucrative advertising business. This was before anyone realized YouTube's potential. In fact, at the time some proclaimed that Google overspent on the acquisition.

Amazon was not available for comment, and emails to Twitch was not immediately returned.

The way I see it, Twitch has the potential to become the next YouTube. And for $1 billion, Amazon, whose video offerings are currently just TV and film, is now getting into user-generated content.

To that end, it's more important for investors to focus on where Amazon is trying to go. There's a reason why Google was reportedly interested in Twitch back in May. Now Amazon is suddenly armed with what may be the only real threat to YouTube's dominance.

This is because YouTube already has its own live video streaming service for gamers. Twitch's service, however, already comes integrated into both Sony's (SNE) PlayStation 4 and Microsoft's (MSFT) Xbox One console.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AMZN $532.63 -0.45%
AAPL $115.15 -2.80%
FB $94.04 -0.11%
GOOG $629.74 -0.23%
TSLA $265.49 2.10%

Markets

Chart of I:DJI
DOW 17,529.72 -68.48 -0.39%
S&P 500 2,089.35 -8.69 -0.41%
NASDAQ 5,094.9030 -20.4790 -0.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs