Even if you're not "a gamer," you've heard of Twitch. It's a live-streaming juggernaut, the fourth-highest source of peak-time internet traffic in the United States, the place that did that Pokemon thing. It only makes sense that Google wanted to buy them, and that Amazon just did. In fact, the surprising thing is that more companies weren't throwing billions at its door.
It's not (just) about the games
Twitch built its kingdom on video game streaming, and it does a whole hell of a lot of it. But before you brush off game-streaming as little more than a (wildly popular) I'm-sitting-next-to-that-jerk-friend-who-has-me-over-and-then-refuses-to-share-the-SNES simulator, there are some numbers to consider. As QZ points out, 15 million people watched the 2013 World Series, but 32 million watched the Season 3 League of Legends Championship. Twitch Plays Pokemon—a phenomenon composed in large part of just menu screens—had 80,000 people watching it. Simultaneously. For days.
But Twitch's real mind-bending potential has to do with framework that can hold up under the weight of so many drooling gamers. There's been no shortage of live-streaming services before—Ustream, Justin.tv, YouTube has tried more than once, but none of them caught on broadly, thanks to either crumby execution, the lack of consistent, magnetic events to watch, or some combination of both.
Twitch, on the other hand, has nailed the balance. It's not perfect—live-streaming never is—but it works on everything and it works consistently, and there's always something to watch. Those strengths that helped it solidify its reign gets even more enticing as the esports world continues to explode, or as Twitch slowly starts opening its doors to other types of live-streaming. Twitch is poised to be the channel-surfing yin to Netflix's binge-watching yang. The future of video is streaming, and streaming is Twitch.
It's not (just) the big events
32 million people watching a gaming tournament is a big deal, as is tens of thousands of people collaboratively beating a Game Boy game one button-press at a time. But that's not all Twitch is about. It's about fledgling games-writers getting to know their fans, or an awkward teenager watching a few Starcraft 2 matches with the friends he left behind after a cross-country move. It's a community.
Twitch might not be what you think of as a classic social network, but it has those same hooks. And it scales beautifully, from any yahoo who wants to share his Minecraft world up to Fred Durst trying desperately to win back a sliver of fame. The combination of intimate community building and shameless celebrity stalking also makes Twitter great, but with Twitch's built-in subject matter to for a dedicated fanbase to bond over, and the ability to swing the door wide open to so much more.
A social network that is actually working isn't easy to make out of nowhere—just ask Google—so the fact that Twitch has one bubbling up in the chat window of every game stream is a huge boon for any company. The trick is finding the sweet spot to snap them up, when they're just starting to snowball but aren't going public. Right where Twitch is sitting.
It's just something for everyone
Google couldn't help but salivate at the Twitch's live-streaming prowess that puts YouTube to shame, and that super-engaged community that puts even a non-zombified Google+ to shame. Between YouTube and Twitch, Google would have been video king of the internet, and all just in time for the rollout of Android TV.
Meanwhile Amazon's got no way to better supplement the Fire TV's somewhat undernourished gaming side than by owning the service that weds gaming and watching TV. That's not to mention Amazon Prime streaming. It's already rapidly closing in on Netflix in terms of bang for your buck, why not supplement that with rock-solid live-streaming tech and a built-in audience of millions. Amazon Prime Concerts, anyone?
And while Amazon won out in the end, you can bet Google and Amazon aren't the only ones who considered the prospect. Apple has a little set-top box that's looking to make itself a little more appealing to gamers as well. Microsoft has a freaking console, and has been pushing ease of streaming video out from it since day one. Any company that could afford Twitch for around a billion dollars would have been crazy not to buy it. And in the end, it looks like Bezos may have wound up with the steal of a lifetime.