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Twitch–Activision Deal Reveals Amazon’s Prime Plan

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A two-year eSports deal

Twitch, a video service owned by Amazon, is one of Activision’s (ATVI) eSports broadcast partners. As it pushes into the eSports business, Activision is looking to generate revenues through avenues such as content rights licensing, advertising, and merchandise sales.

The arrangement with Activision allows Twitch to live-stream several of Activision’s eSports events. The Twitch-Activision agreement would run for two years, during which Twitch would exclusively live-stream more than 20 eSports competitions featuring popular Activision titles such as Overwatch, StarCraft, and Hearthstone.

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Amazon expanding Prime entertainment menu

Twitch is one of the perks offered under Amazon’s Prime membership program. The eSports deal between Twitch and Activision would expand the entertainment menu under the Prime program. Amazon’s Prime entertainment roster already includes Amazon Prime Video, which offers Prime subscribers access to a plethora of digital video entertainment including original shows.

Like Netflix (NFLX), Amazon is also spending billions of dollars to bolster the appeal of its Prime Video service. The standard Prime subscription, which includes video entertainment, costs $99 per year. A monthly Prime subscription plan costs $10.99, while a standalone Prime Video subscription costs $8.99 per month.

There were more than 85 million Prime subscribers in the US (SPY) at the end of 2Q17, as shown in the chart above, according to CIRP (Consumer Intelligence Research Partners).

Attracting more shoppers to Prime membership

By boosting the entertainment aspect of Prime program through the eSports deal with Activision, Amazon can be seen making another attempt to attract more shoppers to the loyalty program. Prime means a lot to Amazon’s retail competition with Walmart (WMT), eBay (EBAY), and Target (TGT).

According to CIRP, an average Prime subscriber spends more than double what a regular Amazon shopper spends. As such, getting more customers on Prime could translate to more sales and possibly profits for Amazon.

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