YouTube, a subsidiary of Google (GOOG), is completing a deal to buy popular online video streaming website Twitch. The deal, valued at more than $1 Billion, would be the most significant acquisition by YouTube in its short history. Although no official statement has been released, sources close to YouTube have reported that the deal is imminent, despite Twitch’s public relations director stating that “Twitch does not comment on rumors."
The San Francisco based company lets its users watch live gameplay of Xbox and PlayStation consoles from anywhere in the world. Twitch was previously a separate branch of Justin.tv, a live streaming service focused on webcam videos, before it split off and developed a new service. Twitch caters to more than 45 million monthly users, and more than one million active "uploaders." Each Twitch visitor spends an average of 106 minutes per day on the site. In February of this year, Twitch ranked 4th in Internet traffic, ahead of popular websites such as Facebook (FB) and Hulu.
Twitch also gained popularity through its “Twitch Plays Pokémon” campaign. This social experiment consisted of roughly 8,000 people simultaneously entering commands in an attempt to beat Pokémon Red Version. The stream received tremendous support from entertainment website Reddit. Twitch's stream averaged 80,000 viewers, peaking at 121,000 people actively participating at one time. Reportedly, a total of 1.16 million people participated in the experiment; the stream finished with a total of 55 million views.
Given the FTC must approve this purchase, Google is reportedly preparing to defend itself from U.S. Regulators who will challenge the acquisition. YouTube is already the most popular online video provider, so it's understandable that the $1 billion deal is labeled as "anticompetitive."
YouTube's acquisition of Twitch will allow Google to enter the live streaming market, via a consolidated subsidiary, something the company has thus far failed to achieve. In entering the live services market, YouTube could cement itself as the king of Internet video.