Piper Jaffray analyst Gene Munster believes gaming spectatorship could become Amazon's (AMZN) next large endeavor, potentially allowing the company to grow into "an ESPN of gaming." The analyst believes the giant's Twitch unit may be worth up to $20B in five years. Munster's view echoes previous sentiments about the enormous potential of the eSports space, as Baird analyst Colin Sebastian previously said that competitive video game playing in organized leagues could be on the verge of becoming the "biggest media and sports growth opportunity you've never heard of."
VALUE OF TWITCH: Gaming spectatorship began as gamers shared highlights on YouTube, but this evolved as Twitch enabled livestreaming, Munster told investors in a research note. In 2011 Twitch emerged as the first platform focused on sharing livestreamed gaming, and was acquired by Amazon.com in 2014 for $1B. Last year, Twitch had over 100M unique monthly viewers and more than 240B minutes of gameplay was consumed by viewers. League of Legends World Championship, the largest gaming event, attracted 37M viewers, Munster noted. The analyst believes Amazon's Twitch could be worth $5B-$20B in five years, adding 2%-8% to the giant's market cap. Furthermore, Amazon.com can now develop its own games on Amazon Web Services and promote them for free through Twitch, according to Munster. The analyst has an Overweight rating and $800 price target on Amazon shares.
OTHERS TO WATCH: Electronic Arts (EA) announced that it will create a new division focused on eSports and competitive gaming, a move applauded by research firm Robert W. Baird. The company's decision to create this division should bolster its user base and increase its monetization levels, the firm previously noted. Activision Blizzard (ATVI) also said in October that it will launch an eSports division, with research firm Jefferies saying that the company may be in the best position among video game makers to benefit from this trend. In a note to investors, the firm added that Activision Blizzard had five of the top fifteen most popular games on Twitch in July. Jefferies believes hardware companies like NVIDIA (NVDA) may also benefit from the eSports trend.
PRICE ACTION: Near noon, Amazon shares were up 1.2% to $565.59, Electronic Arts rose 1.35% to $64.36. Activision Blizzard gained 2.3% to $31.97 and NVIDIA was up about 1% to $31.94.
Reporting by Jessica de Sa-Mota.