Amazon buys video-gamer site for $1B

Jeff Bezos is ramping up Amazon.com Inc.'s entertainment ambitions, buying video service Twitch Interactive Inc. for about $1 billion in its biggest acquisition ever.

Amazon moved in to buy the online gathering place for video gamers after the start-up's deal with Google Inc. fell through, people with knowledge of the matter said. Amazon is paying $970 million in cash. Including retention-related payouts, the transaction is worth about $1.1 billion, said one of the people, who asked not to be identified because the talks are private.

The deal, the largest in Amazon's 20-year history, gives the Web retailer an online forum of more than 55 million monthly active users, where people discuss games or watch other gamers as they play.

Bezos, Amazon's chief executive officer, has made video games a focus of a strategy to add more entertainment services. Just as the company is beefing up TV programming available to Amazon Prime members, the company operates a game studio in Seattle and has been luring software developers to build more video-game titles for its Fire TV set-top box, Fire Phone, and Kindle Fire tablet.

"Broadcasting and watching game play is a global phenomenon, and Twitch has built a platform that brings together tens of millions of people who watch billions of minutes of games each month," Bezos said in a statement.

Twitch is available on Sony Corp.'s PlayStation 4 and Microsoft Corp.'s Xbox One game consoles. Started about seven years ago as Justin.tv, the service has a highly engaged audience of people who watch others play video games. In February, one million people shared videos via Twitch. The company raised $20 million from investors last year.

The deal also highlights the stepped up rivalry between Amazon and Google. In addition to battling for customers watching an increasing amount of video through the Internet, the two companies also are competing for business in online data storage and Internet advertising.

The deal was first reported by technology-news website the Information. Craig Berman, a spokesman for Seattle-based Amazon, did not return a call seeking comment.

Google and Twitch were in talks this year on a transaction that could value Twitch at about $1 billion, a person familiar with discussions said in May. As the deal with Google was being discussed, investment banker Frank Quattrone introduced Twitch to other potential bidders, one of the people said. Sally Palmer, a spokeswoman at Quattrone's Qatalyst Partners L.L.C., did not immediately return a call for comment.

Buying Twitch for $1.1 billion would be larger than Amazon's acquisitions of Zappos.com Inc. in 2009, Kiva Systems Inc. in 2012 and Diapers.com in 2010. Amazon paid $817.3 million in stock for Zappos. Amazon has not been a prolific deal maker like Google or other large technology companies, buying just 18 companies since 2012, according to data compiled by Bloomberg.

As people move more of their entertainment habits away from traditional television, interest has grown in online video companies with large user bases.