The online media world is swirling with rumors that YouTube is preparing to announce the acquisition of popular video game streaming platform Twitch. The deal, reportedly an all-cash offer of $1 billion, would be the largest in YouTube’s history.
Formerly known as Justin.TV, the Twitch platform is popular among gamers who use it to live stream game play or to post recorded content. Though often used by gaming creators to expand their audience or provide a more interactive live play experience Twitch offers many features similar to those of YouTube. Given the video giant’s size it is likely that the acquisition will trigger legal scrutiny as integration at this scale could have an anti-competitive impact on the online video market. It is likely that YouTube is delaying the announcement of the deal in order to prepare for the inevitable Justice Department review.
Legal concerns aside, the acquisition of Twitch would represent another canny move by new YouTube CEO Susan Wojcicki. Recent months have seen the video giant throw significant amounts of money behind print and television ads. These ads are aimed at expanding the market for YouTube creators in the already hugely popular beauty and lifestyle content verticals. Acquiring Twitch would secure YouTube’s place as the premier destination for gaming content, another massively popular and rapidly expanding genre in online video.
It is likely that the speed and scale of the acquisition are designed to steamroll a rumored competing offer from Google’s recently resurgent rival, Yahoo. In recent months Yahoo has becoming more aggressive in its effort to claim a larger share of territory in the online video space. In addition to a slate of original digital television content announced at NewFronts, Yahoo is also rumored to be pursuing exclusive content deals with some of YouTube’s top creators. Acquiring Twitch would be an effective way to shut Yahoo out of gaming content and secure those high-growth verticals for YouTube.