Here's Why Amazon Just Paid Nearly $1 Billion For A Site Where You Can Watch People Play Video Games

$4 it is buying $4, a video-streaming site that's for video gamers, for $970 million in cash.

Google was reported to have acquired the site last month for a whopping $1 billion, but early Monday, The Information reported that $4 said the site was, in fact, also in talks with Amazon.

But what makes Twitch such a huge business?

What The Heck Is It?

Twitch launched in 2011 as a branch of Justin.tv, a popular video-streaming site. Twitch was focused on video-game-related content.

People can create their own channels, where they upload footage of themselves playing video games while sometimes providing audio commentary over the footage. In some cases, people host video game podcasts and shows.

The site is also where many e-sports competitions are broadcasted live.

Users get their own channel pages, which includes a built-in chat room for the players and the viewers to interact.

How Big Is It?

Twitch is huge. In an April report, it accounted for more than $4 in the U.S., according to online video analytics site Qwilt. That made it the No. 1 live-streaming platform by a large margin.

In February, $4 in the U.S., right after Netflix, Google, and Apple, respectively. At 1.8%, it was bigger than Hulu, Amazon, and even Facebook in terms of peak traffic.

And that's only in the U.S. According to Qwilt, Twitch ranks in the top 5 video entertainment sites across the globe. That's huge for a site that's only related to video gaming.

Twitch is now so big, in fact, $4, saying that Twitch was now the focus of its resources, according to CNET.

Why Is It So Big?

According to $4, in 2013, 58% of Twitch users spent more than 20 hours per week watching videos on the site.

Twitch has its own iOS and Android apps, and has been integrated with Xbox and PlayStation consoles. PC gamers can also upload footage to Twitch.

$4 has a Twitch app.

On the PlayStation 4, for example, sharing some gameplay action to Twitch is as easy as pressing the "Share" button.

People love watching other people play games and commenting on them.

Felix Kjellberg, the Swedish YouTube star behind the channel $4, makes around $4 doing just that.

Much like other video sites, Twitch offers a $4. And Twitch users can stream footage on the site for as long as they want, even 24 hours a day.

E-sports is another huge money maker for Twitch. People flock to Twitch to watch live streaming of their favorite video game tournaments, such as "League of Legends" and "StarCraft."

Some Cool Things Happening On Twitch

In February, Twitch crowdsourced more than $4 To make the players move, people entered verbal commands in the chat room.

And this month, Twitch users went from playing "Pokemon" themselves to $4 More than 220,000 users are tuning in to watch a fish named Grayson Hopper play the '80s Game Boy game.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.