Some places are calling this new acquisition rumor of Twitch.tv to be one that has YouTube as a suitor and others are calling it a Google acquisition. Ultimately, Google is the parent company even though it would directly associate with YouTube in terms of media delivery and sharing. Whether you say YouTube is acquiring Twitch or Google, the end result is that Twitch is getting acquired for $1 billion in cash according to Variety, an interesting source of M&A news. While I would certainly allow this rumor to mature and ferment a bit in the rumormill, this may actually be the most reasonable acquisition (and acquisition price) in quite some time.
Also, keep in mind that this rumor is likely a little bit off in terms of accuracy since Twitch.tv is actually a subsidiary of Justin.tv which is a much older site and serves all types of video traffic. In fact, it is a direct competitor with YouTube since it delivers live stream video feeds much like YouTube does now (YouTube didn’t offer this before). In fact, the Variety article mentions the fact that that Twitch.tv was born out of Justin.tv but they don’t acknowledge its direct ownership by Justin.tv (which is now incorporated as Twitch Interactive, Inc.). In fact, Twitch.tv is a higher ranked website globally than Justin.tv with Twitch.tv ranking 279th and Justin.tv 2742nd. But the real problem here is that I have a VERY strong feeling that there is a lot of cross-use of proprietary IP between Justin.tv and Twitch.tv and we’re likely looking at a full acquisition of Justin.tv and Twitch.tv as a whole by YouTube (or Google).
The reason why Google’s acquisition of Twitch.tv makes so much sense, even for $1 billion is the absolutely insane growth of game streaming and eSports. We just reported on Friday the fact that Dota 2’s International competition Prize pool had reached $5 million. Well, at the time of publication, it has already reached $5.7 million and likely has much further to go. And with games like Dota 2 reaching such crazy levels of prize pools there are sure to be more people watching these games get live streamed on services like Twitch.tv. Not just that, but with Google and YouTube’s infrastructure we could see a vast improvement in Twitch.tv’s functionality as well as upload capability which would allow a lot of streamers to upload their streams more easily to YouTube and simplify their income from online gaming/streaming.
While Twitch.tv’s earnings and profitability remain secret, I do believe that $1 billion is a fair price for the website and their audience of 43 million users. Sure, they’re no WhatsApp or Viber but they do have a very loyal and strong base and they are growing at a pace that is more than encouraging. Not to mention, there is already quite a significant amount of revenue streaming through Twitch.tv which a lot of apps like WhatsApp and Instagram simply didn’t have when they were acquired.