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Why Jim Cramer Thinks Amazon Web Services Is Amazon's Secret Weapon

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TheStreet's Annie Gaus wrote about Twitch and whether or not the streaming company. which is owned by Amazon, is the Death Star's secret weapon. 

Gaus reported on Twitch in her Tech Skeptic column:

Twitch, which Amazon (AMZN) - Get Free Report acquired in 2014, doesn't seem like it has much to do with Amazon's core businesses, at first glance. It's a broadcasting site, a social community, and a game delivery platform rolled into one -- and at 15 million daily unique users and 3 million streamers, it's wildly popular in its own right. But it's also increasingly a profit engine that advances Amazon's other efforts in advertising, original video and more, according to D.A. Davidson analyst Tom Forte.

"Twitch is one of the few assets that Amazon has that market underappreciates," he said. In a September 2018 whitepaper, Forte estimated Twitch's gross margins at 55%, second only to AWS, advertising and third-party retail sales. "I think that Twitch gives them another advertising content platform to monetize...Amazon is building a lot of video content, and I think they're it because they realize it's essential to move forward with their advertising efforts by leaps and bounds."

Twitch's popularity was apparent at GDC, with game developers packing into educational sessions focused on how to use the array of add-ons available to developers and Twitch streamers -- like prizes or interactive plugins allowing viewers to get involved in the gameplay -- that can make experience more engaging and fun. Although it hasn't said anything publicly a streaming service, it was also apparent that Amazon is assembling a cohesive games strategy that wraps together Twitch, AWS, the Lumberyard game engine, GameSparks developer platform and even Alexa.

Related. Jim Cramer: Stay the Course Because the Recession Is Not Coming

Jim Cramer weighed in, saying that he believes that the secret weapon of Amazon is actually Amazon Web Service, due to the fact that many of the companies that are IPOing rely on AWS. 

Watch to head Cramer's breakdown. 

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