Amazon's doing something incredibly smart with its Twitch service: selling games to viewers
Amazon's purchase of video game streaming Twitch for $1 billion has been paying off for years already, but it's about to become an even smarter investment with the introduction of a new service.
Starting this spring, people watching games on Twitch will be able to buy whatever game they're watching - directly within Twitch. As you might imagine, Amazon is taking a cut.
And that cut adds up quickly - it's this exact business model that makes Valve-owned Steam such a juggernaut. On an even broader scale, this is how Apple makes money on the iPhone/iPad App Store.
The twist with buying games directly through Twitch is that part of the cut also goes toward the streamer (as long as the streamer is part of Twitch's "partner program," that is). That means Twitch streamers can make a cut of the profits from the sales of whatever game they're streaming.
It also means that the large, loyal audiences that follow Twitch streamers can be directly monetized - Twitch already makes money from those audiences through advertising, as well as through a paid "Pro" service that removes adds and grants other benefits. This enables yet another avenue for Amazon to cash in on the millions of people watching game streams on Twitch.
When the service launches this spring on Twitch, you won't be able to buy every game you see being streamed - just those where the game's developer and/or publisher worked with Twitch to make it happen. There are some notable names among that initial list, such as Ubisoft and Telltale Games, but all the highest-profile game makers are missing: companies like EA, Activision, Sony, and Microsoft are all missing.
A brief video introducing the service was created by Twitch, which we've embedded below - check out the full blog post from Twitch right here.