10 Reasons YouTube Wants to Buy the Twitch Video Game Streamer

By Don Reisinger

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.

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.

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.

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.

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.

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.

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.

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+.

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.

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.