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Google's YouTube Live has been badly beaten by Twitch.tv in the streaming video niche

Twitch.tv is reportedly about to become a part of Google's YouTube arsenal, with Google acquiring it for roughly $1B USD, according to reports in The Wall Street Journal and Variety.  Twitch is a service that allows gamers to post real-time videos of their gameplay.  It boasts over 45 million users (mostly watchers) and 1 million broadcasters.  It is a much used app on both the Sony Corp. (TYO:6758) PlayStation 4 and the Microsoft Corp. (MSFT) Xbox One.
 
I. The Purchase
 
The WSJ was the first to report on the impending purchase, posting on Sunday that Google had entered into serious acquisition talks.  Variety followed up with an announcement on Monday that a deal has been reached.
 
While word of the purchase has yet to be confirmed by either company, the deal -- while expensive -- seems a sage one from Google.  Twitch.tv was found in June 2011 by Justin.tv co-founders Justin Kan and Emmett Shear (the latter of whom served as its CEO).

Twitch.tv
Twitch.tv is the internet's top gaming live streaming video service.

Essentially a spinoff of Justin.tv's much-used gaming channel, the rebranded service grew by leaps and bounds thanks to $20M USD in seed funding.  One early backer was Thrive Capital, a venture capital fund for Princeton Univ. and other institutional investors. Thrive had already struck gold with its Instagram investment (following the Facebook, Inc. (FB) acquisition).  Rockstar Games publisher Take-Two Interactive Software, Inc. (TTWO), Bessemer Venture Partners, Alsop Louie Partners, and WestSummit Capital rounded out the group of early investors.
 
II. It's All About the Live Streams, Baby
 
As of this month, Alexa ranks Twitch.tv the 180th most visited site in the U.S. and the 252nd most visited site in the world.  In terms of traffic by bandwidth, the site is the fourth largest in the U.S., trailing only Google, Apple, Inc. (AAPL), and Netflix, Inc. (NFLX).
 
In February it accounted for 1.8 percent of peak U.S. internet traffic, according to a report in The WSJ which cited statistics from DeepField.com.  Notably, Twitch was slightly ahead of Hulu (1.7%, 4th), Facebook (1.5%, 5th), Valve (1.3%, 6th), and Amazon.com, Inc. (AMZN) (1.2%, 7th).  Network-equipment vendor Sandvine reported that Twitch in March 2014 represented roughly 1.35 percent of all downstream peak traffic bandwidth in the U.S., triple its usage from a year before.

Twitch Banner
Twitch.tv is the fourth largest internet traffic source in the U.S., at present.
[Image Source: EvilGeniuses on Twitter]

By contrast YouTube has 1 billion users uploading over 6 billion hours of video per month -- enough to earn it 13.2 percent of peak traffic (2nd place) in the March report, just behind Netflix (1st place).  
 
But YouTube's weakness is Twitch.tv's strength -- live streaming.  YouTube already has a live-streaming service -- YouTube Live -- but it has trailed Twitch.tv in usage.  As of March, according to Qwilt, Twitch was responsible for 44 percent of video streaming traffic, putting it well ahead of YouTube Live.

YouTube Live
The move should help with monetizing Twitch.tv's large user base.  While current ad revenues are unclear, it is obvious that with a user base that large, Google can turn those clicks into dollars.  YouTube already has extensive experience monetizing gaming-themed content channels such as gaming personality Felix "PewDiePie" Kjellberg, who with 27 million subscribers is YouTube's most watched personality.  YouTube has over 100 gaming themed channels with a million subscribers or more.
 
Twitch is not the only Justin.tv spinoff to be scooped up by investors.  As one of the oldest sources of (mostly) legal streaming video content, Justin.tv has produced a number of spinoffs since its 2006 launch.  A social-video-sharing app called SocialCam was acquired by AutoDesk, Inc. (ADSK) for $60M USD in 2012.  Exec, a spinoff relating to housecleaning services, sold for $10M USD earlier this year according to The WSJ.
 
Google had previously invested in Machinima, a network of gaming-themed YouTube posters that largely focused on so-called "playthrough" videos.  That stake was for a minority share, not a full acquisition.  YouTube itself is a Google acquisition, purchased in 2006 for $1.65B USD.  Google also made a number of high-profile robotics and high-altitude drone acquisitions in recent months.

Sources: Variety, WSJ



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Overpriced?
By BRB29 on 5/19/2014 11:19:57 AM , Rating: 2
Unlike FB's acquisitions, Google's acquisitions are usually much more sensible. Twitch worth $1B may seem excessive to some people. However, it is a very popular platform for gamers. Now it is on both PS4 and XB1 as well. Google will definitely get more than their money's worth with Twitch.




RE: Overpriced?
By Reclaimer77 on 5/19/2014 11:38:59 AM , Rating: 1
Agree. Hell the first thing I thought when I saw the price was, "That's all?". If anything these guys could have held out for a better offer I would think. They're on the upswing, not the backslide.


RE: Overpriced?
By aurareturn on 5/19/2014 12:10:35 PM , Rating: 2
Actually, Instagram is a better buy at $1 billion than Twitch. I thought Facebook got a bargain for Instagram considering how much Pinterest is worth now.


RE: Overpriced?
By Mint on 5/19/2014 1:41:48 PM , Rating: 1
Yeah, but that was two years ago, when the significance of social media wasn't as concrete and established as it is today.

It's hard to find a bargain like that today.


RE: Overpriced?
By KFZ on 5/19/2014 12:20:23 PM , Rating: 2
Like Youtube, they may very well be on the backslide now.

I'm sick of seeing generations of simple, economic and fruitful innovation continuously absorbed by corporate blobs that can't or won't compete.

Though I suppose this is slightly better than Facebook's *laundry list* of acquisitions that read like it had no idea how to run a social media platform. FB is like the American, fat-faced Kirby with a giant maw sucking in everything it can to sustain itself.


RE: Overpriced?
By TakinYourPoints on 5/19/2014 6:42:01 PM , Rating: 2
Of all the big techs out there I actually have the least problems with Facebook's acquisitions. While most will either absorb companies assets into existing products, rebrand acquired products while ruining them, or throw them in the dumpster. Facebook does none of that. Its been almost three years and Instagram is still Instagram. You wouldn't know that Facebook owns them. They're keeping their hands off of it. Same with WhatsApp, they're leaving them be.

Oculus is the most exciting of them all. Carmack, Abrash, they just hired Kenneth Scott and most of the core id team. Its like they're putting together a Manhattan Project for VR and letting them be. Pretty awesome.


RE: Overpriced?
By MrBlastman on 5/19/2014 12:23:32 PM , Rating: 2
It actually makes sense, as a purchase, too. Ever since I discovered Twitch, I started streaming to it first, then porting to Youtube, versus recording directly on my PC, then uploading. It saves me time.

You can even rip stuff off Twitch to your PC if you want to actually edit it, then re-upload to Youtube. This merger will hopefully make stuff like that even easier.


RE: Overpriced?
By aurareturn on 5/19/2014 2:19:27 PM , Rating: 2
I don't think that's what Youtube bought Twitch for - not to make it easier to rip videos and upload to Youtube. Youtube is trying to move towards a live content business. They want to offer live content whether it's live TV shows, concerts, or now video games.

Google is trying to position Youtube as a cable alternative.


RE: Overpriced?
By MrBlastman on 5/19/2014 4:29:45 PM , Rating: 2
That's obvious.

Think of it this way--the more tools, flexibility and functionality they add to Twitch, the more likely they are to draw an audience and more importantly, talent that is willing to broadcast more frequently on this platform versus other ones.


RE: Overpriced?
By EricMartello on 5/21/2014 2:26:29 PM , Rating: 1
When I'm pwning noobs 1v2 in WoW on my warr or shammy I'm making sure to direct their stream of tears to twitch, for the world to see. lol

Unlike a lot of these tech purchases that are grossly overvalued by investment banks that only like to look at peak potential rather than harsh reality, twitch could be exactly what google needs - a direct video stream to a captive audience.

Now if you remember there used to be a program called FRAPS that was one of the most popular programs for recording video while playing a game and it was not free. NVIDIA started including a very good program called shadowplay with GeForce experience, for free, and it is substantially better than fraps.

Literally overnight, fraps' value as a program and company plummeted because of shadowplay (which I use and love)...and so with Twitch being so easy to replicate, it is not unlikely that game developers will start adding a "spectator mode" to their games, which could load as a java applet and allow anyone - whether they own the game or not - to watch realtime gameplay that is rendered in realtime on their respective systems, without the massive bandwidth requirements that twitch currently has...then again, if that tech ever became popular google would probably buy it and make it part of twitch.


That's it?
By Rage187 on 5/19/2014 1:10:39 PM , Rating: 2
I watch Twitch streams 5-8 hours a day. I'm pretty surprised it was only worth $1 billion. That's the cost of a crappy sports franchise and far more viewers watch Twitch. Not only the number of viewers but the make up of the users is the gold star of demographics. Males 25-35.




RE: That's it?
By inighthawki on 5/19/2014 1:45:59 PM , Rating: 3
quote:
I watch Twitch streams 5-8 hours a day

Wow...


RE: That's it?
By Rage187 on 5/19/2014 1:49:30 PM , Rating: 2
TrumpSC playing Hearthstone is always on. My kids and I watch it. I tell them it is cartoons.

I also watch it to see new games before I buy.


RE: That's it?
By atechfan on 5/20/2014 5:16:38 AM , Rating: 2
I'm worried that you have kids.


RE: That's it?
By kamiller422 on 5/20/2014 12:22:11 AM , Rating: 2
If he is American, I worry for the future of my country.


RE: That's it?
By FITCamaro on 5/20/2014 8:08:02 AM , Rating: 2
Please tell me you're a stay at home mom or dad if you have 5-8 hours of TV watching time a day. I mean I get off work at 3:30 most days and home by 4-4:30 on days I don't go to the gym. So if I go home and do nothing but watch TV, that's about 5 hours. But 8? I'd be up until 1 am. And I get up at 5:30. Typically these days by the time I'm home, me and the wife have dinner, and we sit down, we have maybe 2-3 hours. And right now I'm doing homework during that.


Not imminent
By BPB on 5/19/2014 2:26:39 PM , Rating: 2
I read elsewhere that this is not imminent. From the WSJ as of yesterday at 9:08PM:

The talks are at an early stage, and a deal isn't imminent, the people said. The potential purchase price couldn't be learned. Twitch also has considered raising additional funding instead of selling the company, according to one of the people.




RE: Not imminent
By TakinYourPoints on 5/19/2014 6:35:18 PM , Rating: 2
Crossing fingers it isn't. First AT&T acquires DirectTV, now Google may take Twitch. Consolidation in this space is not what we need, especially since Twitch became popular partly because streamers didn't want to deal with Youtube. It was an alternative that got big because it was an alternative, and now it may be absorbed by the entity that content creators were trying to get away from in the first place.

Content ID takedowns without a way to contest them, forced integration with other Google services, decreased payout rates to content creators, the list of bad things that can come out of this is long. Twitter and Reddit blew up on this news yesterday and nobody is happy.


Dang
By geddarkstorm on 5/19/2014 9:42:03 PM , Rating: 2
Google Plays Pokemon doesn't have nearly as cool a ring to it.




I cannot believe...
By Motoman on 5/19/14, Rating: -1
RE: I cannot believe...
By stm1185 on 5/19/2014 3:34:51 PM , Rating: 2
You mean like people sitting around and watching soccer? Millions of people watching other people play a game where if they score 3 times, its a lot!

I'd rather watch a Hearthstone, CS, or SC2 tourney, then Soccer, Baseball, Golf...


RE: I cannot believe...
By Motoman on 5/19/14, Rating: 0
RE: I cannot believe...
By Reclaimer77 on 5/19/2014 6:06:28 PM , Rating: 2
Okay grandpaw....


RE: I cannot believe...
By TakinYourPoints on 5/19/2014 6:45:57 PM , Rating: 3
Aside from being entertaining, watching professionals play is also a really good way to improve.

If you aren't a competitive gamer then none of this matters to you. If you play deeply competitive games like Dota 2, Starcraft 2, or Hearthstone, then the road to self-improvement is greatly helped by watching people who play at a very high level.

Aside from all that its also a lot of fun. Live events are even better. I've been to several live Starcraft 2 events and I've been to Valve's International Dota 2 championships for the last two years. I'll be there again in July. The last two times were at Benaroya Hall, a 2000 seat concert venue. This year is at Key Arena and I expect there will be about 15000 seats there.

The event will have over a million live viewers online via services such as Twitch. The (mostly) crowdfunded prizepool has hit $6 million in a little over a week. It accumulated so much faster than last year's International (topped out at $2.8 million) that Valve is going to have to come up with a lot more stretch goals. I think it will hit at least $8 million and possibly $10 million.

Competitive gaming is actually a thing. Its really fun watching anyone compete at the highest level, whether it is soccer, football, basketball, Chess, Go, and even Dota 2, Hearthstone, or Starcraft.

I'll leave this here: http://www.gamespot.com/articles/twitch-beats-out-...


RE: I cannot believe...
By Motoman on 5/20/2014 1:42:17 PM , Rating: 1
quote:
the road to self-improvement is greatly helped by watching people who play at a very high level.


No it isn't. If you need a hint or tip, sure - go look up something on Youtube quick. But you're not going to fundamentally become a better gamer by watching someone else play - in the same manner that I'm not going to become a better basketball player by watching NBA games all the time. That person who's simply fundamentally better than you is, well, simply fundamentally better than you. They twitch faster, they have better hand-eye coordination with their mouse, they can see more moves into the future than you can (like a good chess player), etc. You won't become them by watching them.

And to that point, I don't really care how many people willingly sit down and waste their time watching someone else play a video game rather than playing it themselves. There's a million people there that clearly have no self-worth, such that they've consciously made the decision that experiencing the game themselves would be a less worthy use of time than watching someone else experience the game.

Playing the video game yourself is, in and of itself, a personal-betterment exercise. Playing the game enhances you analytical thought processes. Enhances your reaction time. So on and so forth. But those are benefits you get only from *actually playing* the game yourself.

You know what you get from watching someone else play? Fat.


RE: I cannot believe...
By TakinYourPoints on 5/20/2014 6:15:11 PM , Rating: 2
quote:
But you're not going to fundamentally become a better gamer by watching someone else play - in the same manner that I'm not going to become a better basketball player by watching NBA games all the time.


Practice is obviously the most important thing. Watching does help a lot though. If you want to get better at Hearthstone then watch someone like TrumpSC play constructed and arenas. If you want to get better at SC2 then watch the player of your favorite race. If you want to get better at Dota 2 and see how top players deal with pressure and how quickly they respond, watch them.

You obviously don't play competitive games so I don't expect you to understand this at all. I do expect you to condemn something you don't understand though. You really should learn to have a more open mind.

quote:
You know what you get from watching someone else play? Fat.


I run 10 miles a week and am a lean 145lbs. All that video game watching and playing has obviously made me a big fatty!


RE: I cannot believe...
By Reclaimer77 on 5/20/2014 6:18:56 PM , Rating: 2
Wow all you want to do is judge and enforce your world view instead of an actual discussion.


RE: I cannot believe...
By TakinYourPoints on 5/26/2014 6:21:00 PM , Rating: 2
I know you're on my side here but that statement is incredibly ironic coming from you.


RE: I cannot believe...
By TakinYourPoints on 5/20/2014 6:24:09 PM , Rating: 2
quote:
That person who's simply fundamentally better than you is, well, simply fundamentally better than you. They twitch faster, they have better hand-eye coordination with their mouse, they can see more moves into the future than you can (like a good chess player), etc.


You're one of those guys that believes in "talent" over hard work.

Both practice and watching matters. People who play physical sports watch videos of their own games and other games all the time. Teams watch for mistakes, speed skaters and runners review their form, etc etc. The same applies here.

Aside from playing Starcraft 2, one of the best ways to improve is actually watching your own replays. The best feature added in the last expansion is a button that appears at the end of every match that lets you immediately watch your last game played. Reviewing enemy strategies and your own mechanical mistakes is as important as the physical practice itself.

Anyway, the same applies here. Watching players in the top .0001% can help to skip weeks of bad practice by absorbing just a little bit of what they're doing. This is so incredibly obvious to anyone who's view of gaming isn't limited to on-rails single player or casual games.


RE: I cannot believe...
By atechfan on 5/20/2014 5:22:00 AM , Rating: 1
While I don't watch pro sports on TV, seeing them live is a completely different thing. No way in hell that watching some kid on LoL, which isn't a really deep game to begin with, holds a candle to attending a sporting event.

When you watch pro sports, you are seeing feats of athleticism that most of us could only dream of. Watching games on Twitch lets us see what we could see while playing the game anyway. Everything looks the same. Sure, we might not get as many kills as the eSports guys, but it looks exactly the same.


RE: I cannot believe...
By Motoman on 5/20/2014 11:44:07 AM , Rating: 1
Exactly. The vapidity of people seems to be increasing at an exponential rate. Now we apparently can't even be bothered to play video games ourselves, and are content just to have someone else play them for us.

Holy balls.


RE: I cannot believe...
By Murloc on 5/20/2014 1:44:01 PM , Rating: 2
watching other players play is a good way to improve your skills.
It's also used to show new game content by companies, doing developer talks and stuff like that.

I sometimes watch age of empires II videos, live on twitch or on youtube.

Of course watching someone play FPS live is stupid unless he's showing some particular tricks (which are best viewed on offline videos anyway), because those games are all about playing a lot to get better, there's not much strategy.


RE: I cannot believe...
By retrospooty on 5/19/2014 6:24:51 PM , Rating: 1
"I can't even imagine ... choosing to sit and watch some other person, who you don't even know, play a video game instead of playing the game yourself."

I cant imagine wanting to do that either, but it's a pretty big thing on youtube. Some of those people have huge followings. There are legions of people that log on to youtube and watch other people play Minecraft alone...

I cant imagine having a foot fetish either, but I cant deny that many people have one.


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