Google has reportedly beat out Microsoft and others to reach a deal to buy Twitch, a popular videogame streaming company.
The acquisition, which is expected to cost $1 billion, according to Variety, will give YouTube a war chest of content that appeals to the hardcore gamer.
Over the past three years, San Francisco-based Twitch has become the ESPN of the video game industry, where viewers go to watch live footage of videogames being played.
Twitch, which started off as Justin.TV, would have been particularly strategic to Microsoft, but a report by Verge suggests that Twitch considered a deal with Microsoft unfavorable because it would no doubt tie its content to the Xbox platform. Twitch is embedded in both the Xbox One and Sony’s PlayStation 4 console.
Obviously, the acquisition talks between Google and Twitch could still breakdown, but from this vantage point, it looks like Microsoft is losing another significant acquisition that could have similar ramifications to Google’s original purchase of YouTube. Just as Microsoft has had to painfully concede the video streaming race to Google, and embed the YouTube app in every platform it makes from Xbox to Windows Phone, it too will have to partner with Google for videogame content.
Twitch is the leader in the space, with 45 million monthly users and more than 1 million members who upload videos each month, and Google has been aggressive in building out its gaming channels. To make matters even more skewed in Google’s favor, the search giant has also invested in Machinima, one of the largest gaming video companies on YouTube.
And, while video games may sound like small piece of the video-streaming market, it isn’t: Twitch represents 1.35 percent of all downstream bandwidth in North America.
For now, Twitch’s videos run on its own platform, rather than on a third-party site, like YouTube, and monetizes by advertising to its very lucrative demographic. Users can pay a premium to get a commercial-free version, called Twitch Turbo, for $9 a month.