Why Amazon is bringing Twitch’s most lucrative parts deeper into the Amazon Ads fold

Finding the value

When Amazon acquired Twitch in August 2014, the livestreaming platform largely justified its billion-dollar price tag for three reasons: its role as the central hub for the online gaming and streaming community, its uniquely powerful livestreaming infrastructure, and its ability to serve advertisements to gamers at scale. (Twitch representatives declined to comment on this story.)

Twitch’s livestreaming tech has proven to be lucrative indeed for Amazon — but that aspect of the platform no longer lives under the Twitch umbrella. Instead of offering third-party vendors access to its streaming services through Twitch, Amazon spun up Amazon Interactive Video Service (IVS) to be its dedicated livestreaming product.

Amazon IVS launched in 2020, and third-party companies’ use of IVS has expanded considerably over the past year. At the moment, it is the streaming infrastructure for a wide range of Twitch competitors, from Kick to FACEIT Watch to Blast.TV. In other words, Twitch is effectively the default livestreaming provider for the entire internet, but the revenues from this advantageous positioning no longer go directly to Twitch.

“There was a technology aspect to the purchase that has been implemented,” said Twitch founding team member and former head of creator development Marcus Graham. “I can’t really speak to whether or not IVS has been successful, but I do know that one of Twitch’s largest competitors is utilizing it. So they’re doing something right; we know that it’s not a net-zero investment.”

Much like Twitch’s livestreaming infrastructure, the platform’s advertising business has also gradually shifted over to the Amazon side of the fence over the past year. Historically, brands and agencies looking to buy ads on Twitch have generally worked with the platform directly to do so. But starting in 2023, Amazon Ads began to take the front seat in discussions with interested advertisers, once again making Twitch at least nominally subordinate to Amazon’s broader advertising business.

“If you’re going in as Amazon, Twitch will inevitably not be the forefront role,” said Mike Murphy O’Reilly, global head of media and brand partnerships for Dexerto. “It’s no longer going in potentially as Twitch, but going in as Amazon, if that is the case of what’s happening.”

None of the above represents a negative change for the brands and agencies that were already working with Twitch. In fact, bringing Twitch’s ad business under the aegis of Amazon Ads has been a positive, not a negative, for companies such as Cxmmunity Media, which operates the HBCU Esports League. Instead of upending the day-to-day flow of its relationship with Twitch, the change has helped Cxmmunity Media feel like it is part of the bigger Amazon story.

“It provides more of an opportunity for us — more scale, reach and really just digital impressions as brands are coming to the Amazon network,” said Cxmmunity Media CEO Ryan Johnson.

But what about Twitch?

As Twitch’s advertising inventory pops off — and its streaming infrastructure becomes the primary streaming infrastructure for large swaths of the web — Twitch itself is at a bit of a crossroads. Twitch is still the biggest livestreaming platform, but over the past two years it has also become a focal point of controversy. Creators have protested against Twitch’s changing revenue share and brand partnership policies, while advertisers have voiced concerns over the brand safety of some of the platform’s content.

The aforementioned challenges risk threatening Twitch’s third value proposition: its role as a central hub for the online gaming community. However, Twitch remains by far the most popular livestreaming platform on the internet, as well as many advertisers’ default choice for reaching gamers programmatically and at scale. Whether or not Amazon is currently in the process of splitting Twitch into its most useful parts, the platform has tremendous cultural value that will not be going away anytime soon.

“I tend to believe that the intrinsic value of Twitch as a cultural platform is still fucking amazing,” Graham said. “When something happens on Twitch, a week and a half later, my mom is like, ‘I saw this thing that happened.’ There is a constant injection into culture, whether that’s gaming or mainstream or lifestyle, that comes from Twitch — and that is really powerful.”

Since Dan Clancy took the reins as CEO last year, Twitch has been pushing very consciously to regain creators’ loyalty through efforts including improved revenue share options and a coast-to-coast charm offensive by Clancy himself. To some extent, the initiatives have been a success, with streamers responding positively to creator-focused policy changes.

As real as it is, though, the cultural value of Twitch as a gaming community hub is much more difficult to pin down than the value of both its livestreaming infrastructure and its advertising business. Those aspects of Twitch represent the platform’s most concrete and fastest-growing revenue streams — and in 2024, both of them have made their way over to the more inviting shade of the Amazon umbrella.

“What was valuable to Amazon was the technology, because Amazon is a technology company,” said a former Twitch staffer who spoke to Digiday on the condition of anonymity. “They made Twitch develop a white-label service; that was part of the agreement for being bought. So they got what they wanted — they got the most valuable part.”