Opinion: YouTube's Twitch acquisition rife with peril and possibilities

Reports circulated over the weekend that YouTube (under Google) is planning to acquire Twitch for more than $1 billion. Just how beneficial this is to gamers will depend largely on how autonomous Twitch is allowed to be under the Google banner.

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[Originally posted May 21, 2014]

Over the weekend, reports began to surface from Variety about how YouTube, a subsidiary of Google, has plans to invest more than $1 billion to acquire the game-streaming service Twitch. The talks are ongoing, and nothing has been formally announced, but already gamers and industry-watchers alike are wondering: what would this mean?

On its face, a YouTube acquisition makes a lot of sense. YouTube offers its own live streaming service for events, and Twitch is an established brand with the infrastructure to support game streaming. It's a ready-made match between two companies that just clicks. That may be why, according to The Verge, Twitch is not only accepting the YouTube offer, but passed on other courters like Microsoft.

Not only that, but Twitch should be a compelling get for Google and YouTube. According to investment site The Motley Fool, Twitch ranked fourth in peak Internet traffic in February. Only Netflix, Google, and Apple finished ahead of it, so acquiring the service draws in another top-trafficked site with a passionate and existing base of current users.

However, not everyone is enthusiastic. As members of that existing base, current Twitch fans have some reasonable concerns. The acquisition could spell big changes for how we enjoy streaming game footage. As with any big move, this acquisition comes with opportunities and drawbacks. At its core, judging the outcome will depend largely on just how much autonomy Twitch is allowed after the transition sets in.

Foremost among these potential drawbacks are the ads. At its core, Google is an advertising company. It may be best known for its search engine, but it successfully monetized that business with targeted ads based on search results. While Twitch uses ads and subscriptions to generate revenue, the ads on YouTube are noticeably more onerous. Between pre-roll, mid-roll for longer videos, and pop-ups at the bottom, Google has found a whole host of ways to generate revenue, each of which gets in the way of content. That's understandable--it is a company hosting absurd amounts of data for free, after all--but one has to wonder if Twitch will become just as cluttered if the deal goes through.

That also raises the question of how ads will be handled during lengthy live events. YouTube tends to interrupt longer videos with mid-roll ads, at fairly random moments. Twitch sometimes uses mid-roll ads, but its business is largely based around live viewing. That makes the possibility of increased mid-roll ads difficult to place properly, and creates the potential for viewers to miss out on great moments. Again, Google's influence could mark a sea change in how we're accustomed to consuming events.

Even more problematic could be the expansion of Google's existing issues with copyright. In an apparent move to placate copyright holders, YouTube's reporting system is automated to the point of easily abused. We've already seen some game companies give tone-deaf responses to the advent of streaming. Publishers seem to be playing it smarter now, no longer rejecting what is essentially free promotion. But if Google's policies and enforcement mechanisms take hold at Twitch, they'll be forced to kowtow to any publishers who are behind the times.

That's certainly not to say that such an acquisition is all doom and gloom. Google is a massive company, and with that investment would come resources to expand Twitch's capabilities. Just as the drawbacks are largely based on Google inserting itself into Twitch's operations, the benefits come down to Twitch continuing business as usual with a new injection of funds. Whatever plans Twitch may have been sitting on for the right opportunity, such an investment could spur it on.

And while some concerns are certainly valid, we can safely rule out a few common fears. Twitch likely won't be folded into YouTube. Such a move would signal that YouTube is interested in the technology instead of the brand, and Twitch's traffic gives the company ample reason to maintain both as they already are. The possibility of Google's rivalry with Microsoft motivating them to pull the Xbox One functionality is remote. Twitch is a service, after all, and the more eyeballs on it the better. The rivalry hasn't stifled the YouTube application on Xbox systems, so there's little reason to think it would happen here.

The reports seem too specific at this point for the deal to fall through, unless something wildly unexpected happens, so we'll probably see an announcement soon enough. Once we know the terms, we can better anticipate any changes. For the time being, the reported deal is rife with potential benefits and disadvantages. If Twitch keeps its independence, we can gladly welcome our new Google overlords. The real danger here is that the massive company will begin meddling.

Editor-In-Chief
From The Chatty
  • reply
    May 21, 2014 7:00 AM

    Steve Watts posted a new article, Opinion: YouTube's Twitch acquisition rife with peril and possibilities.

    Reports circulated over the weekend that YouTube (under Google) is planning to acquire Twitch for more than $1 billion. Just how beneficial this is to gamers will depend largely on how autonomous Twitch is allowed to be under the Google banner.

    • reply
      May 21, 2014 7:22 AM

      I like these opinion pieces.

      I have a feeling in a year traffic will move over to another streaming service. Google/Youtube already makes it hard for their channels to make money.

      With the shenanigans that go on in Twitch chats I could see Youtube messing all of that up.

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      May 21, 2014 7:43 AM

      "And here's a new unit that we see in starcraft. It looks like a crab <ad>Are you having crabs?</ad>...."

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      May 21, 2014 8:24 AM

      Maybe it's just Steve Watts here, I'll have to go back through and check, but I was coincidentally thinking that writing standards have made fantastic improvements lately.

      Maybe it's just the way you're formatting and indexing different kind of posts that appropriately differentiates the different kind of posts, or maybe you guys are just putting a helluva lot more effort into the site content.

      But as a long time occasional critic of some of the staff's methodology, I think you all are doing an amazing job here lately. (Not that it was ever a bad job)

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        May 21, 2014 3:55 PM

        Yeah the work they're doing on content lately is great and I feel like the right direction for the shack. Plus I think as a site that's generally not going to be a leader in breaking news focusing on opinion and in depth pieces is important. If anything that type of content is good for building an audience and consistently bringing back readers and viewers. But I think the content should be sharp and try to avoid outright click baiting. I think it works well in combination with the chatty as well which is generally a discussion driven format. I like that they're specifically marking pieces as opinion etc it's a good practice.

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          August 7, 2014 8:19 AM

          Somewhat agreed, although I feel like opinion pieces should be heavily monitored specifically game-focused. Otherwise you'll turn into Kotaku or Polygon.

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      May 21, 2014 9:18 AM

      Twitch itself only ever plays ads when you load up/refresh a stream. The only time a "mid-roll" ad will play while you are watching a stream is if you are watching a Partnered/Subscriber channel and the streamer himself/herself runs an ad/series of ads. Some of them do it via an automated bot to play one every so often. But most of the Partnered ones I follow only play ads when they take a break. Either way, any ads you see beyond loading up the stream or refreshing are purely done by the streamer, not Twitch.

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      May 21, 2014 9:31 AM

      Nice piece. Anyone know if Twitch is profitable?

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        May 21, 2014 10:16 AM

        I'm not sure, but I will say it's somewhat irrelevant to Twitch's current value. It has a huge *potential* to be profitable, regardless of whether it is now or not. Most sites that rely on advertising for revenue take years to break even and/or become profitable. They initially invest heavily into getting the users, and only later once they have tons of users do they start experimenting with ways to monetize and advertise etc.

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          May 21, 2014 11:11 AM

          Twitch must have such enormous bandwidth costs, though. I guess Youtube makes it work.

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        May 21, 2014 2:14 PM

        Youtube wasn't when google bought it. Go back and read the LOL google from back then.

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          May 21, 2014 2:22 PM

          Yeah, they had no ads back then, right?

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            May 21, 2014 2:28 PM

            basically what will happen with twitch. and don't forget to integrate with g+

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              May 21, 2014 2:29 PM

              Twitch already has lengthy ads at the beginning of every stream, as well as mid stream sometimes.

              What is the cut they take from subscriptions, anyone know?

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                May 21, 2014 2:37 PM

                15 to 30 seconds is lengthy? I've never had an ad over 30 seconds and I've never had more than one upon loading a stream.

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                  May 21, 2014 3:07 PM

                  They can go up to 3 minutes long, depending on the broadcaster (the partners can select the ad length. 3 mins tend to be movie trailers). They also can cycle ads, so for example, when MANvs Games or Towelliee finishes a stream, for the last 20-30 minutes, they'll just cycle ads the entire time.

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                    May 21, 2014 3:12 PM

                    I was referring to the 'beginning of every stream' statement. I mostly watch people play Hearthstone and MOBAs, and they never play mid-stream ads for more than a minute, if ever at all.

                    I can see the huge mega streams like Towelie (I don't fucking care how he misspells it) and whatnot playing longer mid-stream ads but I wouldn't know, they are all annoying as hell and usually suck at games.

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                      May 21, 2014 3:38 PM

                      The 3 minute ads can play at the beginning of the stream as well. It happens to me on my friend's Xbox One all the time.

                      Generally they're movie trailers. An ad from 15 s - 3 minutes can be selected at any time. You may just not be in a region that is interesting to those advertisers, which is why you haven't seen it.

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                        May 21, 2014 10:01 PM

                        That, or I only watch Twitch on my iPad and it's the device that makes the difference. I have never seen a trailer as an ad.

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                May 21, 2014 3:00 PM

                Twitch has anywhere from 15 seconds to 3 minute ads.
                Subscription cut for new broadcasters in the Sub program is 50%, those who have larger audiences, like Towelliee will have slightly different splits (Towelliee's is ~40/60 split as I recall).

                The larger channels have different deals, like TeamSp00ky. Twitch sends contracts out for the larger channels.

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      May 21, 2014 9:50 AM

      Good article... the only missing piece that IMO is key is the horrifying prospect of a forced Google Plus login for interaction, like they did with Youtube. I think it's just a pathetic desperate attempt to compete with Facebook on the whole social network thing, and if they try to do that to Twitch I have a feeling they'd lose a significant number of users. Oh well, I suppose all good things must come to an end after all.

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        May 21, 2014 3:01 PM

        My understanding is that google+'s forced integration is dead over at Google. They did just fire the lead of G+

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          May 21, 2014 3:54 PM

          I heard he's not at Google any more, but the details about the departure, and whether or not forced G+ integration had anything to do with it, are murky. I definitely hope that's the case though... I thought that was a pretty evil move on their part, and a pretty annoying experience as an otherwise mostly happy Google products user.

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      May 21, 2014 9:54 AM

      Just means there will be more automated takedown forced compliance

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      May 21, 2014 11:21 AM

      "Twitch ranked fourth in peak Internet traffic in February. Only Netflix, Google, and Apple finished ahead of it"

      How is Apple getting all that traffic?

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        May 21, 2014 11:24 AM

        Everything on iTunes. Movies, tv, music, apps.

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        May 21, 2014 11:42 AM

        Because when you download app updates in iTunes it re-downloads the entire app.

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        May 21, 2014 2:36 PM

        I have a room with 4 thousand ipad 1s constantly installing and uninstalling every version of angry birds in existence.

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      May 21, 2014 3:18 PM

      Huh, I find Twitch ads far more annoying than Youtube, because increasingly most Youtube ads for me are skippable after 5 seconds, and Twitch ads aren't.

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        May 21, 2014 3:21 PM

        Twitch ads on iOS will also crash the stream about 90% of the time, forcing you to reload it from scratch. The entire Twitch app on iOS is pretty awful.

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          May 21, 2014 3:43 PM

          If they're going to keep bugging me to send them feedback in the Twitch app, then I wish there was an option between Love It and Hate It. It's certainly better than it used to be, and I like the visual refresh, but it still has a loooooong way to go. If I could watch archived streams on it, I might push that Love It button, and I'm hoping that the backbone of YouTube gives them the ability to offer that.

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          May 21, 2014 5:21 PM

          Unfortunately, the YouTube iOS app is also awful, so they won't get any help there.

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        May 21, 2014 3:43 PM

        The worst is when you watch the entire ad only to find the stream is offline.

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          May 21, 2014 3:45 PM

          Or they've stopped streaming the game that you went there to see.

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        August 6, 2014 4:07 PM

        I ran into a 30-second unskippable YouTube ad a couple days ago, and it was a direct copy of a TV ad. Shameless. I don't know if that was by request of the company owning the product being advertised, but it's completely shameless, considering how annoying and obstructive ads are becoming, in reaction to being unconsciously ignored more and more by consumers over the past 10 years.

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        August 6, 2014 7:05 PM

        100% fucking agreed.

        I've tried many times to turn off Ad Block on Twitch TV to support various streamers but every time I do I get burned. I watch 3 ads, one of them never ends and has no way of closing it without reloading the page. When I reload I got to watch the fucking pre roll ad again and if I do it fast enough I also have to watch the 3 ads the streamer had queued up again and one of those will never end causing this stupid cycle.

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          August 7, 2014 8:23 AM

          Then just leave AdBlock on. Is whatever miniscule amount they earn from your ad view worth the aggravation you go through to support them?

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      May 21, 2014 3:20 PM

      Good article

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      May 21, 2014 3:35 PM

      Nice article. I definitely like content pieces like this I think it adds much needed depth.

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      May 21, 2014 3:44 PM

      I've wondered why, with how much streamers play music on their streams, the RIAA hasn't tried to go after Twitch as an unlicensed music streaming service. Now that they're owned by Google, it seems more likely that the RIAA would be interested in trying to get some money or enforcing their copyrights as they did to YouTube when Google bought them.

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