AMAZON'S TWITCH PRIME MOVE IS GENIUS
TNL Take: 767 days after buying Twitch for $970M, Amazon is finally integrating the platform deeper into their ecosystem.
And it wasn't just one product.
Friday at the start of TwitchCon 2016, Twitch CEO Emmett Shear revealed a slew of new initiatives of which the biggest was the launch of Twitch Prime.
This is a huge move from Amazon.
Here's how Twitch Prime will impact the platform:
/01 FREE GAMES AND LOOT AKA DEVELOPER LOVE
This is the main key to Twitch Prime.
For Twitch Prime Members, they will receive monthly freebies of games and in game items.
Forget the games and focus on the in game items.
- In October, Twitch Prime members will get a branded skin for Hi-Rez Studios’ SMITE
- Until November 6, Blizzard's Hearthstone will receive an Exclusive Hero and custom card pack only for Twitch Prime members
- There will also be continual supply of Boosts and Characters as well
This is so smart.
It not only provides value to the end consumer, but also huge bonus for developers to get more involved with Twitch as a platform - more on that - outside of just live streaming.
If Developers have both marketing + monetization + consumer engagement across Amazon/Twitch; the overall ecosystem becomes much stronger.
/02 GAME DISCOUNTS AKA MORE DEVELOPER LOVE
Twitch Prime members receive Exclusive discounts on New physical games sold by Amazon during the pre-order period and for the first two weeks after launch.
This is also ties directly into potential deeper Amazon Sales channel relationships, revenue sharing and further cements developer relationships.
/03 FREE SUBSCRIPTIONS AKA STREAMER LOVE
Twitch Prime Members get 1 Free Subscription to any channel on a monthly basis. This is again a Win-Win for Twitch: Users get a Free Channel but more importantly - Twitch Streamers get 1 Month of "Free" Income.
This is a further push to keep Streamers on Twitch vs. moving to other platforms.
Another smart move.
/04 AD FREE EXPERIENCE AKA USER LOVE
Twitch Prime members also get the benefit that Twitch Turbo provided, an Ad-Free experience.
You can also say goodbye to Twitch Turbo at this point.
The interesting aspect to me: Obviously based on the number of Amazon Prime/Twitch Prime members, this reduces the US Users from an Ad Sales perspective. Further, Twitch won't show Ads to the Users but will still pay the Streamer as if the Ad played.
Whatever potential Ad Sales revenue losses will easily be offset by the Prime revenue.
So how many people are actually going to sign up? Lets try that next.
/05 IT'S ALL ABOUT AMAZON PRIME
All of these features tie together in one master stroke:
To get Twitch Prime you have to have Amazon Prime.
So what's the potential upside of Amazon Prime subscriptions based on including Twitch Prime?
Without having internal data it's very, very, very difficult to quantify - but I'm going to take a quick 1 minute stab:
- Twitch Users = 100M (Jan 2015)
- Twitch US % Estimate = 50M (The Next Level)
- US Prime Users = 55M (Jan 2016)
- US Prime % = 50% of US Households (July 2016)
Assuming the Twitch user base hasn't dropped in almost two years - it more than likely has - you still can't assume all Twitch users (50M) have Amazon Prime (55M).
A very rough, very quick estimate: A 5% potential increase in Amazon Prime Subscriptions.
Again, just take that directionally if not at all.
Regardless, plenty of number crunchers in Seattle have spent a lot more time, with a lot more data doing this and Amazon is one of the few companies I don't bet against.
Let's wait till the next Quarterly earnings to see if there's any uptick.