With the popularity of Twitch and the recent launch of Luna, Amazon (AMZN -0.00%) is on a roll in the gaming market. In this video clip from "The M&A Show" on Motley Fool Live, recorded on March 18, Fool.com contributors Travis Hoium and Jason Hall discuss several ways the company monetizes its content and continues to grow.
Travis Hoium: There's another question about Amazon trying to monetize Twitch. This is going to be really interesting because I think if you are not familiar, Twitch started as basically a streaming service for gamers.
Jason Hall: Watching people play video games.
Hoium: If you've ever seen those videos.
Hall: If you just rolled your eyes about that and you've ever watched somebody play golf on TV, it's the same thing.
Hoium: But it's insanely popular. One of, arguably, the best acquisitions that Amazon has ever done. Because they did it when those of us who were not watching Twitch on a daily basis did not know who Twitch was. But they bought it for about $100 million [actual purchase price was $970 million] and if you've ever seen those videos of somebody's head in the corner of the screen, while there's a video game going on the main screen, that's Twitch. That's what they do as a business.
As they've added more content to Amazon Prime which is also a streaming service, could you see a convergence there and a way to monetize there? I think there are subscription services to Twitch. Then if you start paying creators, I think Amazon gets a cut of that. I'll also bring up Amazon Luna, which is a service that they recently launched for gaming as well.
I think the idea there is probably that Twitch is going to plug into that very well. I mean Amazon's an interesting company in the aspect that they have the technology behind the scenes to make all these things happen. It's just a matter of how they want to monetize it. As they get bigger and bigger, I wonder if at all just comes out in the wash.
When they go, we're going to raise our price of Prime membership from $120 to $140. I think that was the increase that they recently pushed through. You have so many things you may have watched Twitch, but maybe I spend four hours a day on Twitch and if I get might Twitch for free, what's an extra 20 bucks?
I think that's probably the strategy there is that there's not necessarily anything specific that gets added, but all of these pieces are just working together behind the scenes and the behemoth keeps growing if you will. But I don't know if you have different thoughts on that.
Hall: No, I think so. It gets back to that stickiness and that building the platform and adding more things to keep you on the platform. Just as a good example, Amazon Prime, we have the Amazon Fire Stick on our TV. That's like the platform we use for all of our stuff just because it's the easiest and it's the one that we're comfortable with. No reason to create friction to move over to another streaming device and rebuild all of that stuff. It just doesn't make sense to do it.
If we're looking for content and it's not available through any of our streaming services, what do we do? We pay five bucks to Amazon to rent it. Just like that. Netflix (NFLX 0.70%) doesn't have that. Its built-in optionality and ways to get more money from your consumers that it has built into its platform that is so powerful. It's fantastic. It's really fantastic.
