10 Reasons YouTube Wants to Buy the Twitch Video Game Streamer

 
 
By Don Reisinger  |  Posted 2014-05-20 Email Print this article Print
 
 
 
 
 
 
 
 

Google's YouTube video-sharing unit is reportedly in talks to acquire game streaming company Twitch for around $1 billion. Twitch has little to no following outside of the gaming space, but it's a force to be reckoned with inside the gaming market. The 24/7 service allows developers, gamers and game companies to stream their titles over the Web to millions around the globe. Twitch claims to have more than 45 million visitors per month, streaming a huge volume of content on a daily basis. So far, neither YouTube nor Twitch has confirmed that they're in talks. Still, it looks like Twitch is a likely buyout target for Google, which has acquired dozens of companies over the past few years to fill out its diverse cloud service offerings. Google with its highly valuable stock and huge horde of cash, is willing to pay the going rate to get a service it wants. And if the reports are true, $1 billion will be enough to acquire Twitch. This slide show takes a look at why Twitch's game streaming service has caught Google's eye.

 
 
 
  • 10 Reasons YouTube Wants to Buy the Twitch Video Game Streamer

    By Don Reisinger
    10 Reasons YouTube Wants to Buy the Twitch Video Game Streamer
  • Gaming Is an Important Segment

    Gaming has become an important segment for all kinds of major technology companies, including Google. The gaming segment has a rabid fan base, it's growing in leaps and bounds because of casual gamers on mobile devices, and Google right now has little entrée into those folks. With Twitch, Google can attract the gaming core and provide the foundation for any plans it might have going forward.
    Gaming Is an Important Segment
  • Eliminate the Competition

    Right now, Twitch is competing with YouTube. Web users have a finite amount of time to spend on online video services, and a major segment of the population is increasingly choosing Twitch over YouTube. By acquiring Twitch, Google effectively takes all that traffic as its own.
    Eliminate the Competition
  • Eliminate Competitors From Catching Up

    Because the gaming market is so competitive right now, there are many companies that want to take on Twitch or maybe even acquire the company for their own gain. One of those companies is Microsoft. The software company has made no secret that it wants live game streaming to be the norm on its console, and Twitch might be the secret to that. By acquiring Twitch now, Google can head off any Microsoft overtures and force its archnemesis to start at square one.
    Eliminate Competitors From Catching Up
  • It Helps Google Grow Its Presence in Gaming

    Google's gaming plans are not clear at the moment, but reports suggest that the company would like to expand its gaming market presence well beyond offering titles in its Google Play store. With Twitch's help, Google might be able to build out its gaming business and perhaps launch that long-awaited gaming set-top box. Twitch might be part of a broader gaming strategy for Google.
    It Helps Google Grow Its Presence in Gaming
  • At $1 Billion, It's Cheap Right Now

    Right now, at $1 billion, Twitch is a bargain. The company has more streaming views per month than HBO does with HBO Go, and its 45 million monthly users are only being held back by its lack of cash to facilitate more growth. At $1 billion, Google is getting a bargain. Just a year from now, Twitch could be worth more than double that figure.
    At $1 Billion, It's Cheap Right Now
  • It's Another Channel for Online Advertising

    Twitch hasn't done the best job of monetizing its video service, but that doesn't mean Google can't. Look for the search company to use its ad services across Twitch to generate more revenue off the user base and quickly regain its spent cash. At this point, buying Twitch and using it as a monetization vehicle seems like perfect sense.
    It's Another Channel for Online Advertising
  • Google Can Readily Monetize Gaming

    Gamers, especially the hard-core segment that makes up the majority of Twitch's user base, can be heavily monetized, and Google knows it. Not only do they love being in a community (more on that in the next slide), but they are constantly seeking out gameplay footage, trailers for upcoming titles and access to gaming goodies. There are myriad ways for Google to monetize Twitch and get its money back beyond just advertising, and the search giant knows it.
    Google Can Readily Monetize Gaming
  • Google Can Leverage Its Social-ness

    Twitch has become a social network in its own right. People from across the globe are going to Twitch to watch live games, chatting with each other about the action and setting up their own games outside of the service. Those social features play right into the search company's plans to make YouTube and Google+ closer bedfellows. It shouldn't surprise anyone if Google ties Twitch into Google+.
    Google Can Leverage Its Social-ness
  • Google Can Match Its Growth

    For months now, we've been hearing from Twitch that its biggest issue is keeping up with the demand for its service. It costs a lot of money to pump out so much bandwidth to users, and Twitch, a startup, doesn't have the cash to fulfill that demand. But Google does, which should mean that Twitch will grow somewhat quickly once the service is acquired. Google has what Twitch needs—money to build out its potential.
    Google Can Match Its Growth
  • There's No Sign of a Slowdown

    Twitch's growth over the last year has been nothing short of astounding. According to bandwidth-tracking firm Sandvine, Twitch tripled its total bandwidth usage over the past 12 months, and could do the same in the next 12 months. Although there are competitors to Twitch out there, none has attracted such a loyal following, making the service and its growth potential all the more attractive to Google.
    There's No Sign of a Slowdown
 
 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 

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