Google Purchases Game-Livestreaming Company Twitch For $1 Billion

Although the specific details have yet to be released, sources have revealed that Google signed a deal to buy game-livestreaming company Twitch for approximately $1 billion.

Both Google and Twitch have declined to comment, but Google’s YouTube division is reportedly in charge of the acquisition, which would represent a significant transformation of YouTube’s business.  In 2006, Google acquired YouTube for $1.65 billion.  This latest acquisition of Twitch brings Google one step closer to building a broadcast network of sites and cloud-based services supported by broadband speeds that only Google Fiber offers.

Game-livestreaming has become big business, with the top games in terms of  viewership in 2013 being League of Legends, Dota 2 and Starcraft II.  League of Legends has approximately 70 million monthly active players while Dota 2 has approximately 8 million per month, and both games also have popular e-sports leagues that surround them.  Later this year, Dota 2 developer Valve will be holding its annual tournament, The International, with an incredible $8.4 million prize pool.  This will have marketers wanting to put their advertisements in front of and in between the action as there will be millions of people tuning in to watch.

Twitch was created by Justin.tv founders, and supports live video games and video game streaming.  The company recently announced an update for its Android app that allows viewers to watch games anywhere, providing an expanded search feature to help find broadcasters live or offline.  Once a channel has been selected, the user can learn more about the broadcaster, follow them, or chat with other gamers, even when they’re not streaming content.

Twitch’s primary audience is in the 18-34 age range, and the company boasts 50 million monthly active users and over 1.1 million members broadcasting videos monthly.  The site also distributes shows from gaming-news sites such as CBS Interactive’s GameSpot, Joystiq and Destructoid.  According to Sandvine, Twitch represented 1.35 percent of all Internet traffic in March of this year.  The rise of competitive gaming as a spectator sport is impressive, drawing millions of viewers and providing a multibillion dollar opportunity for advertisers.

While YouTube is the most popular platform for Internet video, serving in excess of 6 billion hours of video per month to 1 billion users worldwide, the majority of those videos are uploaded.  With the announcement of the company’s acquisition of Twitch, the sky is the limit in terms of the expanded reach of YouTube.