Google Inc. has reportedly finalized a deal to buy game live-streaming service Twitch Interactive Inc. for $1 billion and fold it into its YouTube unit.
By acquiring the San Francisco company, YouTube is making a big bet on the growing audience for watching other people play video games. In just two years, Twitch has tapped into an obsessive fan base that has made it one of the largest live-streaming platforms on the Internet.
But, analysts say, YouTube will also probably use Twitch as a springboard to offer live streams of other categories of entertainment, a place where YouTube's own efforts have failed to catch on. The move underscores how companies are investing in services that reflect the way the Internet is enabling a massive shift in how people create and consume entertainment.
"The way Twitch has built and executed this service has been flawless," said Dan Rayburn, executive vice president of StreamingMedia.com. "This is going to let them take the next step forward."
Talks between Twitch and YouTube were originally reported in May by Variety. This week, technology blog VentureBeat cited sources who said YouTube and Twitch have signed the deal.
Spokesmen for both companies declined to comment on the VentureBeat report.
Since word of the talks originally broke, many observers said the union made sense. YouTube has long been a popular destination for gamers to post highlights and tutorials of their game play.
More recently, many of those gamers have started complementary channels on Twitch. In the three years since Twitch officially launched, its traffic has grown from 3.2 million unique viewers per month to 45 million. More than 1 million video game players broadcast themselves on the platform.
The people who watch are extremely passionate about Twitch. The average viewer watches 106 minutes of Twitch live streams per day. About 58% spend more than 20 hours a week watching videos on Twitch, according to statistics from the company.
Those numbers were boosted by deals to build Twitch directly into the latest gaming consoles from Sony and Microsoft.