YouTube is close to buying Twitch, a gameplay video-streaming startup, for $1 billion (NZ$1.15 billion), according to multiple reports.
Since launching in 2011, Twitch has become the go-to destination for video gamers looking to broadcast images of their gameplay to others on the internet.
“Twitch, while not a household name, absolutely is a massive player in the internet today. They absolutely own the video game market,” said Deepfield Chief Executive Craig Labovitz, an expert on big data and internet traffic.
The San Francisco startup recently announced that it has more than 45 million unique users per month, with more than 1 million of them uploading video to the service. Twitch said its collective audience watches more than 13 billion minutes of video per month, and that individual users watch an average of 106 minutes per day. More than half of Twitch’s users spend more than 20 hours per week watching videos on the service, the company said.
News of the acquisition was first reported by Variety, which said the deal is an all-cash offer that will be announced soon. The Verge also independently reported the deal, saying the two companies are working out details concerning how independent Twitch will remain.
The Verge also reported that Twitch had offers from venture capitalists and other tech giants, including Microsoft, but that it chose YouTube’s deal because it believes the Google company is best suited to help it build out the infrastructure necessary to accommodate the streaming service’s rapidly growing audience.
“Twitch would be able to take advantage of all the resources that YouTube already has in place in terms of being able to deliver live video and on-demand video to a global audience,” said Dan Rayburn, an analyst with consulting firm Frost & Sullivan. “That’s very hard to do with good quality and scale so quickly as Twitch is trying to do.”
For YouTube, the deal allows the video giant to instantly grab a foothold in the fast-growing gameplay video market. YouTube has made efforts to step into this market before, but has been unsuccessful thus far. With Twitch, YouTube would be buying a way in.
YouTube and Twitch declined to comment on the reports.