YouTube in $1b deal for Twitch: Reports

YouTube in $1b deal for Twitch: Reports

Summary: Google’s YouTube has closed a deal to acquire video game streaming company, Twitch, for more than US$1 billion, according to a report in Variety.

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Google's video-streaming subsidiary, YouTube, has entered into its largest ever acquisition, reaching a US$1billion deal to take on video game streaming company, Twitch, according to a report by entertainment publication, Variety, today.

The report said the agreement is an all-cash deal and would represent the largest in the history of the video-streaming site, which Google acquired in 2006 for US$1.65 billion.

According to Variety’s sources, YouTube is currently preparing for US regulators to challenge the Twitch deal, with the company expecting the US Justice Department to reach a decision as to whether an acquisition of Twitch by YouTube constitutes anticompetitive behaviour in the online video market.

Meanwhile, The Wall Street Journal has delivered a more sober take on the rumoured deal, reporting today that the two companies are in preliminary talks about the deal.

According to The Wall Street Journal sources, the deal is "not imminent" and the potential purchase price has not been confirmed, with Twitch also considering raising an additional funding round rather than selling to YouTube.

At the time of writing, neither company had commented on the rumoured deal.

If the deal goes ahead, it would represent a potential boost to YouTube’s service, with the Google subsidiary currently lagging behind in the live-streaming stakes. According to online video and networking company, Qwilt, Twitch dominates the live-streaming market, claiming 43.6 percent of the audience.

Twitch, which launched in June 2011 and has so far raised about US$35 million in funding, allows users to watch free live gameplay videos, with the company claiming it has over 45 million monthly users and more than one million members who upload videos each month.

However, Twitch comes in behind Netflix and YouTube for all other types of video streaming online, with YouTube claiming to have more than one billion unique user visits per month and over six billion hours of video watched monthly.

While the potential deal may represent the largest in YouTube's history, it falls well short of its parent company's track record. In January, Google forked out US$3.2 billion for smart home device maker, Nest, with the deal set to round out Google's Internet of Things strategy.

Facebook has also upped the acquisition ante, paying US$16 billion to snap up mobile instant messaging platform, WhatsApp, earlier this year, netting an estimated 450 million users monthly in the process.

Topics: Google, Tech Industry

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Leon covers enterprise technology and start-ups from ZDNet's Sydney newsroom.

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