An excellent option: Why Twitch agreed to sell itself to Amazon

Market Realist

Must-know: Amazon buys Twitch to take on Netflix and Google (Part 2 of 6)

(Continued from Part 1)

Amazon Web Services provided Twitch an excellent option to manage its growth

In the previous part of this series, we discussed why Amazon (AMZN) agreed to buy Twitch for $970 million. Here, we’ll discuss why Twitch agreed to sell itself to Amazon.

The fact of the matter is that Twitch was seeing tremendous growth and didn’t have the technology and infrastructure to manage its development. It needed the support of a big company.

Although Twitch had raised $35 million from investors—which included Bessemer Venture Partners, Thrive Capital, and Take-Two Interactive Software (TTWO)—upgrading its own technology and infrastructure would have taken time. Amazon Web Services (or AWS) provided Twitch with an excellent cloud infrastructure option to manage its growth.

Amazon leads the key segments of the cloud services market

Amazon is the leading cloud services player in the world. According to a report from IT Candor and as the chart above shows, Amazon led the infrastructure-as-a-service (or IaaS) and the platform-as-a-service (or PaaS) markets in 2013. IaaS and PaaS are the key segments of the cloud services market.

The report also mentioned that Microsoft (MSFT), Google (GOOG)(GOOGL), and IBM (IBM) are the other three players following Amazon in this market.

Continue to Part 3

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