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YouTube Spending a Billion Dollars on Twitch May Prove to Be a Bargain

A billion has been spent on less.
May 19, 2014, 9:55pm

Over the weekend, Variety reported that Google/YouTube may spend a billion—with a b—dollars to purchase the videogame streaming site Twitch. While the YouTube spokesman I emailed told me that the they “do not comment on rumors or speculation," it's perfectly conceivable that YouTube would want Twitch. And a billion dollars probably isn't too much to pay.

To the non-gamer, this probably sounds crazy—it's literally a website where people watch other people play video games. But watching someone else play isn't just for younger siblings anymore. Not only is Twitch growing, the audience it's cultivating is a desirably engaged one.

Since spinning off from Justin.tv in 2011, Twitch has become a force of livestreaming nature. According to The Consumerist, Twitch “currently accounts for nearly 44 percent of US livestreaming traffic,” much of it coming straight from the latest generation of game consoles.

The service's number of unique monthly viewers grew by 125 percent from 2012 to 2013, to 45 million. This might pale in comparison to YouTube's boast of a billion unique monthly viewers, but Twitch viewers stay on the site way longer. YouTube viewers stay on the site for about 15 minutes a day, while the average Twitch viewer watched a staggering 106 minutes of video a day. Twitch also boasts a million monthly broadcasters.

Absorbing Twitch might also preempt any rumors that YouTube has already peaked. If YouTube's recent foray into television commercials, subway ads, and also, uh, ads that play before YouTube videos have had you confused, consider that last fall, YouTube traffic made up 18.6 percent of downstream usage during peak hours. By March 2014, it dropped to 13.2 percent, according to a report by Sandvine. That's not a death knell by any means, but this is an industry accustomed to speaking the language of growth.

Twitch, on the other hand, rose over the same period. Last fall it made up less than half of one percent of all downstream bandwidth traffic in North America. By March 2014, it was up to 1.35 percent. That's bigger than HBO Go.

Still, Twitch isn't HBO Go, and it isn't YouTube (yet). Its only similarity to Instagram is its price tag, but if you compare the services, it isn't unreasonable to see why Twitch could be worth just as much—when Facebook bought Instagram, it had 30 million users, no plans for how to monetize, and for a full year didn't make any money. Twitch has already gone through internet-company puberty, and has ads already in place.

And it's not as though YouTube brings nothing to the table. It's the top site for bandwidth on mobile devices, and, let's be honest, we're all curious about that Google cafeteria, right?