NEW YORK (The Deal) -- Though Google (GOOG) had been the rumored acquirer of Twitch Interactive for months, Amazon.com (AMZN) announced a $970 million purchase of the gaming video company on Monday, Aug. 25.
Jeff Bezos' sprawling e-commerce, media and cloud services group will gain a fast-growing property in two appealing markets: video and gaming.
Twitch streams live webcasts of video games, showing the players' faces in a small window while they play. Amazon said that the site had more than 55 million unique visitors in July.
"The company is the fourth-largest producer of peak Internet traffic, outpacing even behemoths like Facebook Inc. and Hulu LLC," wrote Ethan Kurzweil of Twitch-backer Bessemer Venture Partners in a Monday blog post."Twitch streams more live video than [Walt Disney Co.'s] ESPN, [Major League Baseball] and [World Wrestling Entertainment Inc.] combined."
Other backers of the three year-old San Francisco gaming video group are Thrive Capital, WestSummit Capital, Take-Two Interactive Software Inc. and Alsop Louie Partners.
If Google regrets losing Twitch, it could check out Major League Gaming Inc.
The New York-based outfit showcases video games as a competitive sport via its broadcast network MLG.tv, which streams live and on-demand daily content. It also operates Pro Circuit, an e-sports league that features large-scale, in-person gaming competitions.
Major League Gaming has raised about $67 million from investors including Westport, Conn.-based Oak Investment Partners LP.
Other potential suitors include Chinese Internet giant Tencent Holdings Ltd., which holds a majority stake in League of Legends developer Riot Games Inc.; Valve Corp., which makes and distributes video games; as well as new and traditional media players like Time Warner Inc.'s Warner Bros.
Warner Bros. already backs Machinima Inc., which runs a popular gaming-oriented network on Google's YouTube.
Another company in the gaming sphere is Curse Inc., which raised $26 million from GGV Capital and Multiplier Capital in July and operates an online voice service that allows users to chat during games.
Joost Van Dreunen, the CEO of New York firm SuperData Research Inc., said gaming platforms such as Xfire and Raptr, which offer instant messaging service for players, could also attract attention.
"The growth comes from the fact that free-to-play online games have taken off," Van Dreunen said. "As the industry starts to get bigger you'll start to see consolidation."
Amazon expects to close the purchase of Twitch the end of 2014.
Allen & Co. was financial adviser to Amazon, which retained Debevoise & Plimpton LLP lawyers William Regner, Michael Bolotin, Lawrence Cagney, Jeffrey Cunard and Gary Kubek and Kyra Bromley.
Qatalyst Partners advised Twitch.