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Twitch.tv online network reveals value of video gaming market

| Friday, Aug. 29, 2014, 12:01 a.m.

NEW YORK — Video games have been a spectator sport since teenagers crowded around arcade machines to watch friends play “Pac-Man.” And for decades, kids have gathered in living rooms to marvel at how others master games such as “Street Fighter II” and “Super Mario Bros.”

Today there's Twitch, the online network that attracts millions of visitors, most of whom watch live and recorded footage of other people playing video games — in much the same way that football fans tune in to ESPN.

Twitch's 55 million monthly users viewed more than 15 billion minutes of content on the service in July, making Twitch.tv one of the world's biggest sources of Internet traffic. According to network services company Sandvine, Twitch generates more traffic in the United States than HBO Go, the streaming service that's home to popular shows such as “Game of Thrones” and “Girls.”

Fans watch for the same reasons ancient Romans flocked to the Colosseum: to witness extraordinary displays of agility and skill.

Jacob Malinowski, a 16-year-old Twitch fan who lives outside of Milwaukee, admits that some may question the entertainment value of Twitch's content.

“(But) I think it's interesting because you get to watch someone who's probably better at the game than you are,” he says. “You can see what they do and copy what they do and get better.”

Amazon's commitment to purchase Twitch for nearly $1 billion this week is an acknowledgment that the service's loyal fan base and revenue streams from ads and channel subscriptions present enormous opportunity.

Most Twitch viewers are gamers who not only see the live and recorded video sessions as a way to sharpen their abilities but as a way to interact with star players in chatrooms or simply be entertained.

Sorah Devlin, a 31-year-old mother of two from Geneva, N.Y., said she watches Twitch with her 7-year-old son and 4-year-old daughter and enjoys it more than children's television programming. Their game of choice is “Minecraft,” which lets players build — or break — things out of cubes and explore a blocky 3-D world around them. Devlin and her kids watch popular “Minecraft” players who go by names such as iBallisticSquid and SuperChache show their skills. The players, she said, have a sense of humor and are good at keeping the content “at most PG,” so she is comfortable watching them with the kids.

“He likes being able to ask questions, and it made him open up more,” she said of her son. As for Amazon's purchase, Devlin said she was “kind of surprised, but I think they are starting to realize that gamers are much more of an enterprise than they thought.”

Indeed, Twitch fans are the stuff of advertisers' dreams. They are mostly male and between the ages of 18 and 49, an important demographic for advertisers. Twitch's so-called user engagement is high. Nearly half of visitors spend 20 or more hours a week watching Twitch video, according to the company.

“You've got a hyper-growth platform with a niche audience,” said Nathaniel Perez, global head of social media at advertising firm Sapient-Nitro. “It's basically the best you can get — from an advertisers' perspective.”

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