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YouTube acquires Twitch for more than $1 billion [Update]

YouTube has reached a deal to acquire video game streaming company Twitch. The deal is reportedly for more than $1 billion, all in cash. The deal would be the largest in YouTube's history.

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Update: Twitch PR Director Chase has responded to a Shacknews inquiry, replying, "We don't comment on rumors."

Furthermore, the deal isn't entirely a sure thing, according to the Wall Street Journal. Twitch is currently exploring other revenue options that do not include selling the company.

Original story: YouTube has reportedly reached a deal to acquire video game streaming company Twitch, according to sources. The deal is for more than $1 billion, all in cash. The deal is said to be the largest in YouTube's history.

The story comes courtesy of Variety. Both YouTube and Twitch have declined comment thus far.

The transition may not be a smooth one, according to sources within YouTube. The company fully expects for the purchase to be challenged by the U.S. Justice Department on antitrust grounds.

The San Francisco-based Twitch Interactive originally launched in 2011 as an official gaming branch of Justin.tv, which was originally founded by Justin Kan, Emmett Shear, Michael Seibel, and Kyle Vogt. The site has raised about $35 million from several investors. The service's popularity has been such that Twitch-centered features have become a staple for PlayStation 4 and Xbox One.

The deal would be a lucrative one for Twitch, but one that may make current users take pause. The Google-owned YouTube has made headlines in recent months for their harsh copyright stances, with some publishers (Nintendo, among them) notoriously flagging numerous videos containing copyrighted gaming content and claiming all monetization rights. YouTube has compounded the problem by making the appeals process extremely unfriendly to those accused of infringement.

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From The Chatty

  • reply
    May 18, 2014 3:30 PM

    Ozzie Mejia posted a new article, YouTube acquires Twitch for more than $1 billion.

    YouTube has reached a deal to acquire video game streaming company Twitch. The deal is reportedly for more than $1 billion, all in cash. The deal would be the largest in YouTube's history.

    • reply
      May 18, 2014 3:39 PM

      Cool.

    • reply
      May 18, 2014 3:51 PM

      Great, Google taking over everything.

    • reply
      May 18, 2014 3:54 PM

      uuuuuuuuugh

    • reply
      May 18, 2014 3:54 PM

      Makes since I guess, most of the content providers work both platforms.

    • reply
      May 18, 2014 4:01 PM

      Update: Twitch PR Director Chase replied to me with "We don't comment on rumors."

      • reply
        May 18, 2014 4:06 PM

        It's a pretty huge rumor. If it's not true, they will need to get in front of it very soon. I suspect it is true, however.

        • reply
          May 18, 2014 4:11 PM

          Very huge, but Variety isn't the type of publication that would just spitball some rumor or speculation if there wasn't something to it.

    • reply
      May 18, 2014 4:02 PM

      Would you like to use your real name?


      With youtube allowing Nintendo to claim ownership of any let's plays on youtube and thus receive all of the advert cash, how will that affect people streaming games on twitch?

      • reply
        May 18, 2014 4:05 PM

        That's the 1 Billion Dollar Question, isn't it?

    • reply
      May 18, 2014 4:03 PM

      I don't know if this is a good or bad thing!!

      • reply
        May 18, 2014 4:05 PM

        Depends. Are you running a monetized Twitch channel?

      • reply
        May 18, 2014 4:05 PM

        They were doing fine without Google so I don't see how they could really help much other than force G+ integration onto it.

        • reply
          May 18, 2014 4:40 PM

          Is Twitch in the black financially?

      • reply
        May 18, 2014 4:37 PM

        It could be good in that Twitch definitely needs better content delivery, but if it stifles stream content people will probably move to something like hitbox.

    • reply
      May 18, 2014 4:04 PM

      Google+ integration incoming, FINALLY!

      • reply
        May 18, 2014 4:19 PM

        NOOOOOOOOOOOO!!!! DIE DIE DIE!!!

        I haven't made a single Youtube comment in the months since they made it so you can't without a G+ profile. I don't want a G+ profile you fuckers!

        • reply
          May 18, 2014 5:44 PM

          So what you're saying is that the average youtube comment has gone up in quality since they implemented the G+ link?

      • reply
        May 18, 2014 6:40 PM

        Can't wait to see how they fuck this up. I'm assuming they'll immediately get rid of the purple and replace it with white, off white, nearly white, arctic white, and cream.

    • JT
      reply
      May 18, 2014 4:08 PM

      I was wondering when this was going to happen.

    • reply
      May 18, 2014 4:18 PM

      1 billion for Twitch? Not being sarcastic, but that seems pretty tiny when you consider whatsapp for $19 billion and oculus rift for $2 billion. Twitch deserves more!

      Most importantly though, I really really really really hope Google doesn't fuck twitch.tv. It's an awesome gaming site and they better keep Google+ the fuck away from it.

      • reply
        May 18, 2014 4:21 PM

        Ben Kuchera pointed out that YT paid half as much for Twitch as Facebook paid for Oculus.

      • reply
        May 18, 2014 4:24 PM

        i cant imagine they wont do the copyright shit. it would be super, super strange to enforce it on one of their video services and not the other.

        • reply
          May 18, 2014 4:41 PM

          Twitch would only benefit from having the awful music removed.

          • reply
            May 18, 2014 6:42 PM

            I actually enjoy most of the music played by the streamers I follow.

            • reply
              May 18, 2014 8:01 PM

              Would be cool if they just automated the whole thing. If you stream copyrighted music, then a portion of your revenue goes to the owners of the music. Not sure how they'd work out all the details with record companies though, since they tend to be very conservative and slow moving when it comes to new technology and possible new revenue streams.

    • reply
      May 18, 2014 4:42 PM

      Good bye to all the unlicensed background music people stream with.

      • reply
        May 18, 2014 5:12 PM

        Apparently the previous threads have mentioned this, bah!

    • reply
      May 18, 2014 4:43 PM

      Apparently 30-40 million in revenues is worth a 1 billion dollar buyout? What the fuck.....

      • reply
        May 18, 2014 5:38 PM

        I really don't get valuations.

      • reply
        May 18, 2014 5:39 PM

        Its probably increased a lot in the last year with huge potential to grow massively this console cycle.

        • reply
          May 18, 2014 6:39 PM

          Even if it did increase a lot, let says double to 60-80 million. Thats still 8% of the 1 billion!

      • reply
        May 18, 2014 5:42 PM

        I don't get why YouTube didn't just leverage its own brand and create a similar service. Why buy another company for a billion dollars when they could have spent way less than that building a competitor? Twitch might have been successful, but YouTube has brand recognition and a massive install base. They would have been an instant competitor and would have likely won in the end.

        Or not. I don't get it.

        • reply
          May 18, 2014 6:13 PM

          they have a streaming service. have for years.

        • reply
          May 18, 2014 6:18 PM

          there is a perception in these industries that things are becoming more and more a 'winner takes all' market (http://www.wou.edu/~shawd/mediocristan--extremistan.html). Someone achieves critical mass and now has a positive feedback loop that feeds more growth in a way that is very difficult to compete/catch up with even with massive resources. How much bigger is Twitch by the time YouTube gets a live streaming system together and promoted, apps on every platform (iOS, Xbox, etc), the same business partnerships, etc? And then how do they convince all these streamers and companies to switch to YouTube's version? The streamer has a bunch of subscribers, has invested time in setting up their channel and whatnot, has numerous links out there already to their twitch channel that would effectively become dead ads.

        • reply
          May 18, 2014 6:20 PM

          For the user base at least; who does live game streams to Youtube? Almost nobody, because it sucks for that.

          • reply
            May 18, 2014 6:41 PM

            I think they could have made it not suck for less than 1 billion dollars.

            • reply
              May 18, 2014 6:55 PM

              Possibly, but they still would have had to offer something compelling enough to draw people away from Twitch. Just being good or even better isn't enough when there's already a community and culture entrenched in a website/service like that.

              • reply
                May 18, 2014 7:02 PM

                I don't dispute any of that.... but a BILLION DOLLARS

                • reply
                  May 18, 2014 7:11 PM

                  How much have they dumped into Google+ so far? And it still doesn't really do anything to compete with Facebook, it's more of a "me too" service (or at least that's how it seems to me). I can only assume that they didn't want to go that route again. Absorbing Twitch, its streamer and viewer community, the API stuff and Twitch-specific community tools so many streamers rely on to add additional functionality/content/interaction to their streams, new consoles that already have integrated streaming support, etc. is a lot easier than trying to roll their own and then convince people to switch.

                  • reply
                    May 18, 2014 7:14 PM

                    I wouldn't compare trying to compete with Facebook from scratch with trying to compete with Twitch when you already have an integrated online video service.

                    • reply
                      May 18, 2014 7:26 PM

                      It still comes down to being able to attract the user base, which belongs almost solely to Twitch at this point. I have no faith that Google could throw a billion dollars at Youtube live streaming and come out with a product capable of attracting enough users to justify the investment, and apparently neither did they.

          • reply
            May 18, 2014 6:45 PM

            I wasn't there for t because it was on Christmas, but a youtuber duo I follow attempted to do a Youtube stream and they swiftly decided during the process of doing it to do it on Twitch instead.

            And that's where all their streams have been since.

          • reply
            May 18, 2014 6:57 PM

            Okay... I didn't even know they offered that. But then why not improve it? I still don't get it.

        • reply
          May 18, 2014 6:25 PM

          They saw what happens when you try to create a competing service instead of just buying out the userbase with the whole G+ debacle.

      • reply
        May 18, 2014 6:12 PM

        it's not really clear how aggressively twitch has tried to monetize streams. Where are you seeing their revenue? In any case, revenue is meaningless without profit.

        • reply
          May 18, 2014 6:36 PM

          I agree revenues without profit is pointless and the revenues I am seeing are analyst guesses but even if its remotely close to 40 mil revenues, I'd have to guess (yes guesses everywhere) its probably 10% profit if that.

      • reply
        May 18, 2014 7:09 PM

        is that per quarter?

      • reply
        May 18, 2014 8:46 PM

        100 million users = 1 billion dollar buyout. That's my current rule of thumb. It doesn't matter if those users monetize or if you're losing money. If you can get 100 million users to regularly use a service you can sell for a billion dollars.

        • reply
          May 18, 2014 9:57 PM

          Occulus must have had 200 million users!

          • reply
            May 18, 2014 10:36 PM

            Hardware is always bigger gamble (takes much more capital up front, since you can't release hardware patches, and everything has to be 'perfect'), but has a bigger potential payoff.

          • reply
            May 18, 2014 10:44 PM

            It's clearly not the only metric.

            I think in 10 years we'll look back and say that Facebook got a deal on Oculus. VR is the future of this I am certain.

            Also worth noting that these days 1 billion dollars isn't a lot. Not for multi-national tech companies at least. At some point last year Google had 50 billion in cash. Apple has like 150 billion in cash. They literally have more money than they know what to do with. Acquisitions isn't an unreasonable use of a war chest.

    • reply
      May 18, 2014 4:45 PM

      no no no no no no nno on ononon ononononononoonno fuckfuckfuckfuckfguckjfuckfuckfuckfuckfuck you google in your gigantic fat fucking nerd ass.

    • reply
      May 18, 2014 4:51 PM

      I hope it means better stream quality and less issues.

    • reply
      May 18, 2014 4:55 PM

      I was wondering about bullshit like this when you launch a system, or systems, based on their "totally rad "X" integration!" as a central selling point of the platform.

    • reply
      May 18, 2014 5:13 PM

      Given the way Content ID works for both VODs and streaming with Youtube as it is I can't help but wonder if this will push people to alternative streaming site.

    • reply
      May 18, 2014 5:22 PM

      How is YouTube buying twitch instead of Google? Isn't that like Office or Bing buying something?

      • reply
        May 18, 2014 7:55 PM

        Youtube is a company. Google is a company.

        Google bought Youtube, but Youtube is still a company. Google, the company, owns all shares of Youtube, the company. Youtube is still a company though.

        • reply
          May 18, 2014 7:58 PM

          Actually technically, Google doesn't have to own ALL shares of Youtube, but likely does. They definitely own a majority of Youtube. Youtube is a privately-owned company, unlike Google, whose stock is publicly traded.

    • reply
      May 18, 2014 5:33 PM

      I hope this doesn't go through. There are far too few video and steaming sites for user submitted content that have mass appeal. Youtube has a massive lead over everybody with Viemo being number two. Twitch is around 5th place. To give you an idea of how large the gap is, Viemo sees about 7x less traffic per month than google, and Twitch is around 25x less. From there it's really a sharp decline in user base per site. Having one less option isn't really good for anyone.

      Google already has massive appeal over anyone, and seeing them crush all competition with dollars doesn't bode well. What's worse is Google's reputation for kowtowing to anyone who suggests they own a copyright on any piece of content.

      Youtube flat out sucks for those who want to stream games content for any income, and good luck finding any alternative. Oh wait! There's Twitch. Well...maybe no. Google might just take that too.

    • reply
      May 18, 2014 5:35 PM

      Facebook buys Oculus, Google buys Twitch. Weird!

    • reply
      May 18, 2014 5:38 PM

      * GOOGLEPLUS ' D *

    • reply
      May 18, 2014 5:54 PM

      The deals include Justin.tv too I guess?

    • reply
      May 18, 2014 6:41 PM

      RIP truly an American icon

    • reply
      May 18, 2014 6:42 PM

      Boo. Don't need google/youtube fucking up another video site.

    • reply
      May 18, 2014 6:52 PM

      This could be awesome. Twitch's servers suck outside America.

      • reply
        May 18, 2014 8:22 PM

        YouTube's availability sucks outside of America, too.

        • reply
          May 18, 2014 10:33 PM

          Never had an issue anywhere. It's only in America that I hear complaints about Youtube (throttling, etc)

    • reply
      May 18, 2014 7:06 PM

      Too bad.. There goes a great service.

    • reply
      May 18, 2014 7:27 PM

      UPDATE: Not a sure thing, according to WSJ.

      http://online.wsj.com/news/articles/SB10001424052702304422704579570601736756672

      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.

      • reply
        May 18, 2014 7:49 PM

        "Raising additional funding" sounds far less ominous than "exploring other revenue options" (even if they both point to exactly the same activity).

        • reply
          May 18, 2014 10:44 PM

          They're going to earn a few million from a "Save Twitch" kickstarter and then sell the company.

    • reply
      May 18, 2014 8:22 PM

      Hopefully that rumor isn't true. They'd be dumb to sell for $1 billion if you forecast in esports growing in the next 2 years based on the prize pool of Dota's The International I'd argue they're worth a couple billion

      • reply
        May 18, 2014 8:35 PM

        Well in this thread we have ashkie saying anything as high as $1B is WTF, and you're saying they'd be stupid to sell that low.

        Shacknews: It Gets You Market Valuations

        • reply
          May 18, 2014 10:00 PM

          Well what do you think? It just seems to be that the valuations for companies nowadays seems completely wacked when you look back historically.

          • reply
            May 18, 2014 11:41 PM

            I don't think anything, I don't know enough about the financials of the company. I suspect neither does anyone else here but that never stops Shackers.

            • reply
              May 19, 2014 1:33 AM

              If we could only talk about things we were experts on itd get boring pretty quick

            • reply
              May 19, 2014 7:50 AM

              You've never had an opinion on something where you don't have all of the information?

              I suspect the only reason your sphincter is puckered is because we're talking about Google, but I can't say for sure without knowing all of the information.

              • reply
                May 19, 2014 8:35 AM

                I have plenty of such opinions, in areas where I'm informed enough about the general background to think I can speculate. For this kind of thing I don't have a clue. And it has nothing to do with Google being connected. I'm really just completely without any idea of how to come up with a rational estimate.

                • reply
                  May 19, 2014 8:35 AM

                  That was a really wordy way of saying ¯\(°_o)/¯

          • reply
            May 19, 2014 9:26 AM

            it's also a subset of cash on hand. these companies have so much money that accuracy of valuations of the target company aren't really required. so when you look back historically when companies had to balance debt and assets, the target company really had to be pegged well. now, it's make it rain time - which also will be judged in a historical fashion. corporations are cutting staff, cutting R&D, ensuring their margins are inflated. and they are. profit is at an all time high... so, what to do with the cash?

            when you have that much idle cash, the valuation is almost irrelevant, it's just a payback period analysis of how quickly you can absorb their revenue stream.

            anyway it's not really a sign of wack valuations - it's a totally wack amount of idle cash

      • reply
        May 18, 2014 8:45 PM

        Depends on what current ownership structure looks like. If I owned 10 percent I'd gladly take a guaranteed 100 million today as opposed to maybe possibly more in a few years. Taking on additional funding also means dilution so you'd have to grow that much more just to get back to 100m.

        • reply
          May 18, 2014 10:08 PM

          Mark Zuckerberg said no to over $1 billion for Facebook early on, and he owned more than 50% of it at that time. The valuation at the time said that $1 billion was a lot more than it was worth, but he was willing to wait it out, and that paid off. I'd probably take $100 million too, but sometimes it pays to say no and keep growing.

          • reply
            May 18, 2014 11:09 PM

            Who cares if you get more than 100mil?

            • reply
              May 18, 2014 11:58 PM

              I would. Not sure I could cut it on 100 mil for life. Need that much per year, minimum.

            • reply
              May 19, 2014 12:53 AM

              whaaaa...... t is wrong with you?

          • reply
            May 19, 2014 7:37 AM

            Facebook didn't have the burden of having an elephant in the room. Sooner or later, like any other broadcast stream media platform, other companies will start using every copyright law in the book to try and get a piece of the lawsuit pie.

            Twitch probably knew that sooner or later they would have to confront this once they get large enough. They've been flying under the radar so far but they are getting large and sooner or later they'll make a blip. Rather than having to deal with this issue, they probably found it better to get a good number for handing it off on a company that is more technically competent and well versed in dealing with this issue. Twitch was lucky enough to get a value for much more than Youtube. Hell, for a billion I might be tempted to donate a kidney to Hitler.

      • reply
        May 18, 2014 10:05 PM

        Agreed. Video game streaming and eSports are growing really fast and chances are we'll see more games take advantage and make eSport-type games. Twitch is by far the biggest in video game streaming and assuming they can keep that lead I can see them making several times more what they're making now in advertising and other revenue. I hope for their sake they make a shit ton of money, but I also hope they don't get ruined by a buyout, if there is one.

      • reply
        May 19, 2014 1:10 AM

        I tend to agree. Games and consoles have just started figuring out how to integrate with Twitch, and it's going to blow up in a huge way really soon.

      • reply
        May 19, 2014 1:35 AM

        Dumb to sell for a billion? Dude, all the share holders are millionaires if this goes through, why would they bother waiting?

        • reply
          May 19, 2014 2:17 AM

          Because the shareholders could be billionaires.

          • reply
            May 19, 2014 7:49 AM

            When is enough going to be enough for you Americans?

          • reply
            May 19, 2014 9:01 AM

            Is the continued growing success of esports that much of a sure thing though? Twitch would have to be worth at least $10 billion in order for shareholders to reach billionaire status.

            • reply
              May 19, 2014 12:26 PM

              I'd say with the continued success of video games in general, the continued growth of online games and eSports over the past several years, and the way eSports are seen in places like South Korea, I'd say it's extremely likely. Nothing's a sure thing, but it seems like a very safe bet IMO.

    • reply
      May 18, 2014 10:12 PM

      sounds reasonable, and especially in lieu of AT&T and directTV merging. they have nothing else to do with their cash.

    • reply
      May 19, 2014 1:31 AM

      Lame.

    • reply
      May 19, 2014 11:46 AM

      Twitch is AWESOME.. however, what the heck is happening with the Youtube on deal with Twitch? =/