The acquisition, announced today, means Amazon will own the world's largest gaming broadcast service and is one of the company's most expensive acquisitions in its history.
The highest value acquisition by Jeff Bezos and co was online shoe store Zappos, which was valued at $1.2 billion in 2009 but partly in shares. This deal is the largest cash deal, representing US$970 all in cash.
Twitch is a video platform that largely streams content of video games, ncluding live gaming footage, commentary, and online shows.
The company said in a statement it has over 1.1 million unique broadcasters per month, up from 600,000 in November last year. The site's videos also reach more than 55 million gamers, up from 45 millin. And, on average, users watch 106 minutes per day.
"Broadcasting and watching gameplay is a global phenomenon and Twitch has built a platform that brings together tens of millions of people who watch billions of minutes of games each month," said Jeff Bezos, Amazon's founder and chief executive.
"Like Twitch, we obsess over customers and like to think differently, and we look forward to learning from them and helping them."
We'd previously reported last month Google acquired Twitch for $1 billion, though it seems Amazon beat it to the punch. Forbes is reporting the Google deal fell through due to potential antitrust issues that could have come with the acquisition.
"It makes more sense for Amazon to buy it than for Google," Trip Chowdhry, analyst at Global Equities Research, told AFP, adding Google already has a video streaming platform in YouTube.
He described Amazon's move as a "very smart acquisition," saying Twitch will bring more consumers, serve a niche community and "it's another service they can offer to their device users as an app."
The deal seems like a natural fit in some aspects - Amazon has a development arm Amazon Game Studios, and acquired California studio Double Helix Games earlier this year.
As of 2014, Twitch is the fourth largest source of internet traffic during peak times in the United States, behind Netflix, Google, and Apple, and a recent report from networking firm Sandvine said that Twitch had become one of the top 15 sites for bandwidth during peak hours in North America, growing from 0.46% of all "downstream bandwidth" in Fall 2013 to 1.35% by March this year.
Over the past three years that Twitch has been launched officially, the traffic on the site has increased to 45 million per month from 3.2 million unique visitors.
For more information on Twitch check out its website.