Amazon hopes the acquisition will help boost its gaming and video platforms. Twitch is capable of streaming events like game tournaments and music concerts to a large number of people, creating 2 percent of internet traffic in the United States.
"In the same way that YouTube and Netflix have to develop really robust architecture to stream enormous amounts of video, Twitch had to build a similar infrastructure geared toward live gaming," David Cowan, a partner at Twitch investor Bessemer Venture Partners, told the Wall Street Journal.
Google was reported to be in negotiations in July, but the company refused to confirm such speculation. Yahoo was also rumored to be in talks, but also declined to comment.
In addition to the $970 million, Amazon has agreed to pay more than $100 million in extra payments if certain performance goals are met.