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Amazon and Twitch are the competitors YouTube needs

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It's been a hell of a summer for Twitch.

Reports that the game streaming giant was being bought by Google first surfaced back in May. By the end of last month, many were considering it a done deal.

Then, out of nowhere, rumors hit this week that the Google deal had fallen through and Amazon, of all places, would actually be acquiring Twitch. Those initial reports were quickly confirmed via an official announcement.

I'm sure it's been as tumultuous a roller coaster ride inside Twitch as it appears from the outside. But the good news is this: With the Amazon buyout, all of us got the best possible outcome.

Twitch Amazon logo mash-up

[image via @Julia_CaSsian]

The Google problem

Before I get into why I think Amazon is going to make for a great partner with Twitch, let me explain why I was so cynical about Google/YouTube purchasing Twitch to begin with.

For those unfamiliar with my work outside of Polygon, I run a small channel on Twitch and YouTube. We do live shows on Twitch, then we bring archives of those over to YouTube. We're far from massive, but I have a lot of experience working with both services, both as a content creator and a viewer.

Both YouTube and Twitch have their fair share of problems, but all of those problems stem from one major issue by my estimation: They don't really have any competition. There are a handful of very small streaming services you could use in place of Twitch, but if you want to grow an audience of any meaningful size, you're probably going to be stuck on Twitch. The same goes with YouTube for non-streaming video.

Up until now, Twitch and YouTube have lived side-by-side, in more of a symbiotic relationship as opposed to actual competition. Technically YouTube does livestreaming, and technically Twitch does archived videos. But both services have such poor offerings in those fields compared to the other that they've all but encouraged gamers to use Twitch as the default for streaming, and YouTube as the default for archived video.

offering criticism to YouTube is like screaming into a void

This is, of course, why bringing Twitch into the YouTube fold probably looked like such a fantastic deal to Google execs. Imagine a future in which a single company could leverage the strength of both of those sites under a single banner, a single piece of technology. They'd be an unstoppable force in the world of gaming-related video content.

So why is this a bad thing? Let's get back to those problems: When YouTube does something I strongly dislike — say forcing users to log in with Google Plus accounts, or last year's frustrating changes to channel layouts — I have no recourse, neither as a viewer nor as a creator. I cannot go anywhere else to find the content or audience that I would on YouTube.

With Twitch, at least, I've always felt like it's a little more approachable as a company. They have a support account on Twitter that's very active and generally responds to emailed support questions relatively quickly. With Google and YouTube, offering criticism is like screaming into a void. Sometimes things are fixed or at least improved, but I've never had a sense that there's anyone there listening when I have a problem.

I wasn't excited at the thought of Twitch being consumed into that silent behemoth, but more notably it killed a long-held dream of mine: that perhaps, one day, Twitch could step up as a legitimate competitor to YouTube in archived content as well.

Many will say this is still a pipe dream, and I acknowledge that if it happens, it's going to be a long while yet. But I think all of the signs are there.

twitch

A true competitor

Twitch has, slowly but surely, begun expanding its offerings beyond just video games. Twitch's parent company already had a hand in non-gaming content via Justin.tv, which shut down earlier this month. But what if that shutdown was less a move to focus on gaming alone and more to ensure that all content was centered in one place?

Twitch also made some frustrating changes to how archiving on the service works this month. While that shift (and subsequent audio copyright changes) annoyed many users, including myself, Twitch was clear about one thing: The long-term goal is to improve discoverability and usability of archived content.

At the time, many users saw this as a capitulation to YouTube, something Twitch was only doing to prepare for the inevitable buyout. But what if, instead, it was to prepare for Amazon and for a future where they don't need YouTube?

The long-term goal is to improve usability of archived content

Part of the reason YouTube has always dominated the video space without competitors gaining a foothold is sheer cost. Storing video content takes a lot of money, a lot of server space and a lot of very reliable technology.

Lucky, then, that Amazon has all three of those things.

While most people know Amazon primarily as a retailer, the company has also built up a strong business for Amazon Web Services, a cloud computing solution that includes tech for streaming video. Even Netflix, which could be considered a direct competitor to Amazon's own digital video options, uses AWS. "AWS enables Netflix to quickly deploy thousands of servers and terabytes of storage within minutes," says Amazon's official page.

Keeping in mind that this is all speculation and I am far from an expert on this tech: It seems to me that Amazon, with its AWS offerings, is one of the few companies in the world that could ever hope to compete with YouTube. And buying up Twitch could be the first step in securing an already well-developed venue to do so.

Twitch booth E3 2014 photo (Poly wm) 1280

Big business

All of this is long-term thinking, of course. It will be a while before we see any major changes to Twitch based on this purchase. But even in the more immediate future, there are some good things almost certainly in the works.

In a Twitch Town Hall streamed on the site shortly after the Amazon announcement was made official, Twitch CEO Emmett Shear and Amazon vice president of games Mike Frazzini dropped some hints about what's in early discussions for the service.

Most notably, Shear confirmed that Twitch will be working with Amazon's AWS team to improve the quality of video on the service. They're also thinking about ways to use Amazon's roots as a retailer to make more money for everyone involved.

Right now on Twitch, there is one primary revenue stream: advertising. A publisher pays Twitch to run ads, viewers watch them during streams and streamers who are part of Twitch's partner program receive a small CPM (cost per impression) rate. That CPM is generally as low as one cent or less per ad view, meaning streamers need to have thousands of viewers to be successful or supplement their ad income with donations and subscription options.

Amazon offers an incredibly simple and elegant way to increase the amount of money being made by streamers, publishers and Amazon itself by way of its referral program. Referral work like this: A special link to an Amazon product page is put on the site. If a viewer clicks that link and ends up purchasing the product, the referrer — in this case, the Twitch channel — gets a small portion of the sale. Like the CPM, this will generally be a very low amount, but on top of other options, it will add up.

More importantly, this is a system that works for everyone in the industry very directly. The argument in support of YouTube "Let's Play" videos has always been that they're free advertising for a game, that many viewers end up going out and purchasing. Not only would an Amazon referral program on Twitch make that purchase easier than ever, it would provide hard stats and evidence of just how much a great stream of a game can offer to publishers and developers.

This system could be abused, sure. There will be some streamers who do everything they can to get their viewers to click a referral link. But that already exists today. Streamers are already putting referral links into their bios on Twitch, and the ones who are obnoxious about it get called out and lose viewers. For everyone else, this situation is win-win.

In that Town Hall video, Shear and Frazzini also suggest that Twitch's ad-free subscription service, Twitch Turbo, could be aligned with the Amazon Prime subscription service. So paying to get no ads and a few other perks on Twitch may also earn you free two-day shipping and a library of on-demand videos at Amazon. We'll have to wait and see if that affects pricing if and when it happens, but again, in theory: win-win.

Much of what I'm talking about in this article is hopes and speculation. It's what I think could happen, what I believe an Amazon/Twitch partnership is capable of. It's going to take years to see the full scope of how this develops, and that gives plenty of time for either party to make mistakes or drop the ball along the way.

But right now, in the afterglow of the news? I'm so much more optimistic than I ever was for a Google deal.