We at The Practice were all ears when we heard that Google (and specifically YouTube), were in talks to buy streaming company, Twitch, for the cool sum of $1 billion. So just why is YouTube interested in this popular start-up, and what will both companies stand to gain?

Twitch streams user-generated content online, particularly focusing on e-sports and video gaming. The service not only allows users to play games, but also to watch other people playing, whether on an Xbox, PlayStation or computer. We can’t quite get our heads around why anyone would want to watch others play video games, but apparently it’s serious stuff- the site was ranked as the fourth biggest for peak internet traffic in the US behind Netflix, Google, and Apple, and ahead of Facebook.  Twitch puts an end to the need for die-hard gaming fans having to travel to watch pro-gaming championships, as now millions worldwide can congregate online to live-stream such an event.

So what will this mean for both sides? For YouTube, we can see the acquisition proving helpful, as the video-sharing platform has unfortunately not seen huge success with its own live-video streaming service. YouTube live streaming doesn’t even rank in the top ten, according to market research firm, Qwilt, while Twitch occupies a 44 per cent share of the US live-streaming sector for games. And with a 1 million a month user base as well as a unique monthly viewership of 45 million, the high volume of traffic will be ripe for advertisers. Already, Twitch generates revenue through a user subscription system, and via its official broadcasters such as Sony PlayStation and the company behind Grand Theft Auto, Take-Two Interactive. Now, we imagine that YouTube will hope to lure Twitch’s influential target demographic of 18-29 year olds to its platform instead. Aside from this, we also see YouTube using Twitch to broaden its own live streaming efforts, perhaps soon offering viewers the chance to live stream global TV events.

However, will Twitch be set to benefit when it’s already head and shoulders above YouTube’s service? Perhaps it looks as though YouTube wants to quash the competition, and so having power over a major player will certainly help keep control. Although video gaming comes in at the second most popular category on YouTube, Twitch is growing at an even greater rate and so potentially poses a threat. What’s especially concerning for Twitch’s autonomy though, is that it might lose its “cult” appeal and hence its loyal audience, if it succumbs to the Google conglomerate. However, where Twitch is likely to profit is from Google’s piggy bank and wealth of resources which will surely prove useful in fixing any technical problems. And from a user perspective, streamers could stand to earn greater revenues from more profitable YouTube advertising deals than they would likely receive on Twitch. We can see just why Google is keen to purchase such a lucrative platform- after all, the tech company has proven in the past that it has had innumerable success in purchasing a range of popular startups. We just hope Twitch will also stand to profit from the likely acquisition.

Do you frequently use live-streaming services for gaming or other entertainment? And how else do you think each party could benefit from the deal? We’d love to hear your thoughts as always, so please tweet to us @PracticeDigital and share your comments via our Facebook page.