According to reports that surfaced on Sunday, Google Inc. (GOOG) is looking to acquire live-game video streaming site, Twitch, to integrate it with its online video streaming service Youtube. However, the development has not yet been confirmed as official sources from both companies refrained from commenting on the news.
The Wall Street Journal reported that Google is in early talks to buy the video game streaming service for an undisclosed price. On the other hand, Variety reported that the deal has been valued at $1 billion in cash, and is expected to be announced soon.
Twitch started operations in 2011, under the umbrella of Justin.tv and offers online game streaming to a global audience. The startup, which is rapidly growing its user base, announced earlier that its unique monthly visitors grew to 45 million in 2013, twice the levels recorded in 2012. The company also boasts one million members, who create and broadcast videos on the website.
Research by Qwilt, a video analytics company, shows that Twitch is by far the number one live streaming website in the US, generating around 44% of total live streaming traffic in the second week of April. Qwilt refers to Twitch, which has more traffic than ESPN, WWE, Ustream, and MLB.com combined, as the “Netflix of Spectator Gaming.”
Although Youtube, which was acquired by Google in 2006, for $1.65 billion, also offers video game content; its popularity is nowhere near that of Twitch. The San Francisco-based entertainment website has signed deals with Sony Corp and Microsoft to integrate its services in their video game consoles. The collaboration has enabled the website to rapidly attract gamers’ interest worldwide. According to Qwilt, on the day that the Twitch Xbox One app was launched, 30% of Twitch's broadcast came from Xbox games streamed online. The Xbox team also credited Twitch with the success of Titanfall in a blog post.
Twitch, which might be seeking additional capital rather than an acquisition bid, raised $20 million last year to scale up its sales division and infrastructural capabilities. Among other investors, Thrive Capital and Take-Two Interactive Software, Inc. (TTWO) provided $20 million to the startup in its Series-C funding round. The startup has so far raised $35 million in funding.
The potential acquisition, if successful, would be a significant step in transforming Youtube’s business, which is weak in the live-game streaming arena. However, the deal may face opposition on legal grounds on account of anti-competitive concerns.
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