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Twitch and its appeal for Google and Microsoft

01 Jun

The other day, I heard about the rumoured takeover of Twitch by Google for the handsome amount of $1 billion. I have to be honest; up until that point I had never heard about Twitch. Reason enough to look into Twitch and a possible ratio for Google willing to spend such a large amount of cash on this startup:

  1. What is Twitch? – Twitch is a video streaming platform and a community for gamers. Geekwire describes Twitch as “the ESPN of the video game industry” and says Twitch is a leader in that space. Twitch has over 45 million monthly users and about 1 million members who upload videos each month. In a relatively short space of time (Twitch was launched in June 2011), Twitch has successfully created an online streaming platform for video games.
  2. Who use Twitch? – I’m not an avid video gamer myself, but browsing the Twitch website tells me that are in effect two main user roles, which are closely intertwined: game players and broadcasters. Clearly, you can be both and I’m sure that a lot of Twitch members fulfil both roles. One can play games on Twitch channels like Counter-Strike: Global Offensive or World of Tanks or one can create their own pages from which you can broadcast games. A great example of Twitch’s success in engaging its community around a game is TwitchPlaysPokemon which has had over 78,000 people playing a game that turns chat comments into controller inputs, parsing hundreds of thousands of ups, downs, and starts and translating them into in-game movements.
  3. Why is Twitch such an interesting acquisition target? – Twitch is reported to have snubbed Microsoft’s takeover offer but is rumoured to have fallen for Google. This raises the question as to what makes Twitch such an interesting takeover target? I think that the answer can be split into two main factors. Firstly, scale. Twitch has a rapidly growing and very engaged user community who all share a passion for (video) gaming. Secondly, live broadcasting. Going back to the example of TwitchPlaysPokemon, Twitch streams games that get people excited and gets them participating in real-time. This simultaneous element is something that for instance YouTube is lacking. YouTube is great for on-demand video content, but (currently) less so for live event coverage or participation. The combination of both factors (as well as a very rich vein of user generated content and data) makes Twitch an extremely interesting target indeed.

Main learning point: Recently there have been some major takeover deals in the digital industry – think Instagram, WhatsApp and Beats – but the rumoured acquisition of Twitch by Google is interesting for a number of reasons. If I have to highlight one key reason, then synergy is the main aspect that makes this potential takeover sound like a very exciting one. How will Google potentially integrate YouTube and Twitch or at least find a way to combine both platforms? Will the acquisition of Twitch help YouTube in cracking the real-time broadcast element of its offering? Lets wait and see if the deal actually gets done in the first place, but if it does then I will definitely keep an eye out for any future developments involving Google, YouTube and Twitch.

Related links for further learning:

  1. http://www.fool.com/investing/general/2014/05/28/why-youtube-buying-twitch-for-1-billion.aspx
  2. http://www.geekwire.com/2014/microsofts-xbox-shot-potential-twitch-buyer-matters/
  3. http://variety.com/2014/digital/news/youtube-to-acquire-videogame-streaming-service-twitch-for-1-billion-sources-1201185204/
  4. http://techcrunch.com/2014/05/27/tc-cribs-tours-twitch-tv-gaming-office-headquarters/
  5. http://thenextweb.com/insider/2014/05/29/twitch-now-lets-filter-counter-strike-global-offensive-game-streams-map-skill-level/
  6. http://thenextweb.com/google/2014/05/19/google-reportedly-wants-buy-video-streaming-service-twitch-1b-deal-boost-youtube/
  7. http://variety.com/2014/digital/news/why-google-wants-to-hitch-twitch-and-youtube-1201188093/
  8. http://www.theverge.com/2014/5/20/5734108/why-twitch-could-be-the-best-billion-google-ever-spends
  9. http://guardianlv.com/2014/02/twitch-live-broadcast-to-be-included-in-xbox-one/

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