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The Amazon Fire TV game controller, announced April 2, 2014.
Image: Mashable, Christina Ascani

Amazon’s announcement of a set-top box Wednesday morning came to no surprise to anyone following the space. The inclusion of gaming elements was also not a surprise; leaked images of its controller appeared online a month ago and were spot on to what the company showed off at Fire TV unveiling.

Gaming may not have been the forefront of the presentation or press materials, but its hard to ignore the message it sends. Between next-generation consoles like the Xbox One and PlayStation 4, Nintendo’s more family-focused Wii U, the upcoming Valve Steam machines that bring PC gaming to the TV, Android-based gaming consoles like the OUYA, there’s no shortage of ways to get games and other content on your TV in one place.

Amazon may have the power to get wide adoption for the Fire TV, but will it solve any problems for gaming, or add another piece of hardware to a very crowded marketplace?

Android Console Mania

Let’s flash back two summers ago, to the Kickstarter campaign for the OUYA. The $99, Android-based gaming console raised $2.6 million on the first day of funding based on the promise of opening mobile gaming to the television. Others joined in the marketplace: the GameStick, the GamePop, and other controllers that promised to bring your Android games to the TV.

The OUYA is really the only remaining game in town from that lot, and it has even pivoted from its original business model in the way games are sold in its marketplace. Both it and the Amazon Fire TV have the same starting price point — $99 — though you’ll need to plunk down another $40 get Amazon’s game controller. Games on both aren’t expensive either; many OUYA games are still “free-to-try” and Amazon touted most of its titles will cost around $1.84.

So are OUYA’s creators scared?

“Just as Amazon blazed a trail for a new way of selling online, OUYA invented a new way to think about console games. But for us, games are not simply an ‘added bonus’ — they’re the whole point. OUYA is solely dedicated to the devs creating games, and the players who play them. Their ideal experience is all we think about,” said OUYA CEO Julie Uhrman in a statement.

Uhrman’s point is correct. Amazon needs to make sure to give the Fire TV game store the curation and love it requires. Otherwise it will be a giant headache for users, and won’t attract new players. But while the company didn’t make a big show of all the talent it had brought in to the gaming space, publishers and developers were very quickly to send out releases about new titles coming to Fire TV. The number is very encouraging, with casual/mobile names like GameLoft, Glu and Jackbox Games creating content alongside AAA publishers like EA, 2K Games and Ubisoft, names normally associated with traditional game consoles.

Gunning for next-gen

For casual gamers ever considering picking up a next-generation gaming console, the decision now may be less clear cut. If you were already on board with purchasing an Xbox One, PlayStation 4 or Wii U, you probably already grabbed at least one of those. All three offer lots of gaming options, but also integration with media apps like like Netflix, Hulu Plus, Amazon Instant Video, YouTube and more.

Consoles like that each come with big exclusive titles that attract gamers; the Xbox One is drawing shooter fans in with Titanfall for example. But if you just play a few games, and if you don’t spend a ton on it as a hobby, you might not want to spend $400 to $500 on a new console. Adults who have “aged out” of gaming and parents with young kids are perfect examples of this potential demographic.

A major push during the Xbox One marketing campaign was how it integrated into all aspects of entertainment. While the One certainly still does much more, like work with a cable box, Kinect-based fitness apps, Skype and an online friends list, there might be customers who don’t want all the extra bells and whistles and will be happy with a snazzy set-top box. (Provided they don’t already have an Apple TV, Chromecast or Roku.) Nintendo and Sony may have less to worry from this challenger, since both cater to more specific segments of the gamer population with their consoles.

The hackneyed phrase “content is king” never rang more true, though. Android, as a mobile platform, suffers because it doesn’t get the best games first. Amazon will have to build a user base developers want to make games for, but also bring games that make people want to buy a controller. With games coming from its own internal studio, which just hired more talent like the designer of seminal puzzle game Portal, the company could be on the right track.

One of Silicon Valley’s most adept bankers helped orchestrate Amazon’s $970 million Twitch acquisition. BF_STATIC.timequeue.push(function () { if (BF_STATIC.bf_test_mode) localStorage.setItem(‘posted_date’, 1409015559); }); BF_STATIC.timequeue.push(function () { document.getElementById(“update_posted_time_3428552”).innerHTML = “posted on ” + UI.dateFormat.get_formatted_date(1409015559); });

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Michael Fiala / Reuters

Amid Amazon’s announcement today that it would acquire Twitch, a site that streams people playing video games, Frank Quattrone’s name has come up quite often.

Earlier this year, Twitch was in discussions with Google to be acquired for around $1 billion. The discussion had evolved — as they often do in the tech community — from existing partnerships the company had with YouTube. One more recent partnership involved “live annotations,” which would basically alert people watching old YouTube videos of video game streams that the streamer was live on Twitch. As the saying goes: first you date, then you marry.

It was around this time that Quattrone and his firm Qatalyst Partners was invited to begin gauging interest, according to several people familiar with the discussions. The firm held several discussions with potential companies — including Amazon. The deal was taken seriously by the company thanks to an investment from Bessemer Venture Partners — which invested in Diapers.com, a company that was also acquired by Amazon — that was made shortly after the company morphed to focus only on video game streaming.

“Amazon understands developer platforms, they developed one of the biggest ones,” said Ethan Kurzweil, a parter with Bessemer Venture Partners. “There were very strong alternatives to continuing Twitch as an independent company — they had diverse revenue streams on ads and subscriptions, both growing strongly in meaningful numbers. The team felt they could do a lot in amazon’s care and the offer was attractive enough.”

Quattrone is no stranger to Silicon Valley, either. Quattrone and his firm, for example, were the sole advisers to Yammer when the company sold to Microsoft for $1.2 billion. He worked on the initial public offerings for Amazon, Netscape and Cisco, three iconic technology companies, having spent time at investment firms like Morgan Stanley. In the tech and finance community, the man is basically considered a legend. His firm has also organized a number of other high-profile deals like Yahoo’s $1.1 billion acquisition of Tumblr and Google’s ill-fated acquisition of Motorola.

“We are pleased to announce that Qatalyst is serving as exclusive financial advisor to Twitch Interactive in its agreement to be acquired by Amazon.com for $970 million,” Quattrone said, as he typically does following a major deal, in an email reviewed by BuzzFeed. “Twitch is the leading live video platform, with more than 55 million visitors and 1 million active broadcasters per month. In July 2014, Twitch’s user community consumed over 15 billion minutes of content broadcast by individual gamers, pro players, publishers, developers, media outlets, conventions and stadium-filling esports organizations.”

The deal brings to a close the unlikely rise of Twitch, which started off as a 24/7 reality show streamed over the Internet. Over the course of the company’s life, Twitch’s direction changed several times, from a reality TV show, to a livestreaming site for anyone, and eventually to a site focusing mainly on video games. A mobile app centered around sharing video was also spun out of the company, with one of its co-founders leaving to run that app, which was acquired by Autodesk for $60 million.

It also accompanied the unlikely rise of Emmett Shear, who started as a technical co-founder of the company with Justin Kan. A passionate gamer, Shear went from an otherwise introverted engineer focused entirely on the technology to becoming a more-than competent manager capable of running a billion-dollar company, organizing several major partnerships with companies like Google, Sony and Microsoft, and eventually negotiating the company’s $970 million sale to Amazon.

There’s also a neat bit of irony to the Amazon deal. Part of the reason the company was seen to be so valuable was because it owned all its own servers and hardware that powered its high-fidelity live streaming service. Twitch’s co-founders decided to build their own hardware in the earliest days after a call from Amazon, complaining that the service was using too much bandwidth on its servers.

While Twitch was focused on video games, already experiments around concerts, live events and music have begun to emerge on the platform. Amazon has bought a community of deeply-engaged gamers that is more than 55-million strong. But it has also bought a company with the knowledge of how to build one of those communities and services once, and will likely attempt to do again an industry that’s already proven to be popular in several verticals.

“The commerce piece, the community that Twitch created, the way the Twitch customers engage with the greater gaming community and game makers,” Mike Frazzini, vice president of Amazon Games, said as part of the announcement. “It’s just the beginning but all those pieces are very complementary of each other. This is a wholly owned subsidiary, [and] will remain unchanged for a while.”

Read more: http://buzzfeed.com/mattlynley/the-invisible-hand-behind-amazons-970-million-purchase-of-a