In 2014, Twitch was bought by Amazon for $970 million. Therefore Twitch is part of Amazon, comprising other subsidiaries bought over the years, like Audible, Whole Foods, and Zappos (in total, Amazon has 12 subsidiaries). Therefore, as of 2022, Twitch is a multi-billion dollar company, making money primarily via advertising through its video streaming platform (creators use Twitch today across many other verticals).
Twitch is a North American live streaming service with a focus on esports broadcasting and video game streaming. Twitch was founded as a spin-off to Justin.tv. Founders Justin Kan and Emmett Shear noted that the gaming category on Justin.tv was the most-watched category on the site.
Three years after Twitch was founded, it was identified as the fourth-largest source of peak internet traffic in the United States. As a result, the parent company of Justin.tv was rebranded as Twitch Interactive and Justin.tv was shut down.
Twitch Interactive was then acquired by Amazon for $970 million, enabling the platform to become integrated with Amazon Prime.
Twitch continues to dominate the gaming and esports streaming market, boasting over a hundred million actively monthly users. The platform has since expanded to offer creative content, music broadcasts, and affiliate programs for streamers.
To understand Twitch’s origins, it is important to travel back to 2007 when founders Justin Kan and Emmett Shear launched the video broadcast service Justin.tv. The first broadcast showed Kan as he went about his daily life and in 2008, the platform was divided into several categories such as Music & Radio, News & Tech, Animals, Sports, and Entertainment.
Over the next four years, Justin.tv became popular thanks to hordes of users who illegally streamed sports matches and other copyrighted content. When the practice was eventually outlawed, it left Kan and Shear with business whose major drawcard had been surrendered almost overnight.
Pivot to gaming
Around 2011, the Justin.tv co-founders had a stagnant business with no real purpose.
However, the lawless nature of the platform and the freedom it afforded users had resulted in the formation of a passionate video game streaming niche.
The platform’s recent release as an app also resulted in an additional two million users.
But how to monetize the platform itself?
At the time, Kan disliked the niche because it required a lot of bandwidth and he didn’t understand why users would want to spend their time watching others play video games.
But irrespective of Kan’s grievances, traffic data suggested this was exactly what Justin.tv users were doing.
Emmett Shear, himself a gamer, noted that with some added features and embedded advertising, the niche had the potential to become profitable.
The video game category from Justin.tv was then spun out to a new site called Twitch in June 2011.
Twitch was so popular three years later that the entire company became known as Twitch Interactive and the Justin.tv brand was formally retired soon after.
Amazon purchased Twitch in August 2014 for $970 million in cash.
Former Justin.tv COO Justin Lin also stressed that community input has been vital in the development of the new platform’s functionality and features. In essence, the development’s focus was on tools that could enable games to become professionals in their sport.
At the time, the deal was the largest in Amazon’s two-decade history and enabled it to benefit from the rapid growth in the gaming industry alongside Apple and Google.
Connected Business Concepts
How Does Candy Crush Make Money?
Related Tech Ownership Case Studies