Twitch was launched in 2011 and quickly became the preferred destination for users to watch and broadcast video game play. It raised $20 million from investors which included Thrive Capital and videogame-maker Take-Two Interactive Software, Inc. (NASDAQ:TTWO) in early September last year.

Google youtube

Of the numerous products to be spun out of Justin.tv, Twitch is the most successful. Justin.tv, one of the earliest streaming-video sites on the Internet, was founded in 2006 by Justin Kan and Kyle Vogt. Other spinouts include Socialcam and housecleaning service Exec. The former was acquired by Autodesk for $60 million in 2012, while Exec was purchased for a shade under $10 million earlier this year.

No comment from either party

Neither Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) nor Twitch has felt obliged to comment on the talks yet. While YouTube is far and away ahead of Twitch in overall video viewing, Twitch, according to networking firm Qwilt, was responsible for just short of 44% of live-streaming traffic by volume in the week of April 7, 2014. In February, the company claimed around 45 million viewers with 1 million of them creating and streaming video on the site.
According to Mark Fisher, Qwitl’s vice president of business development recently said that Twitch has a growing audience of die-hards who spend hours sharing and viewing live gaming videos making it a desirable platform for advertisers.
YouTube doesn’t “have the engagement, and engagement is what drives advertising,” Mr. Fisher added. “Google can try to build this on its own or they can buy something that’s already out there and doing well.”
It appears as though Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) is interested in the latter solution to drive advertising prices higher. YouTube viewers are largely a click-and-go crowd whereas Twitch users engage with each other allowing the service to sell ads at premium prices.

The increase in videogame content

For non-gamers it might come as a surprise that YouTube’s videogame content is as popular as it it. For example, Felix “PewDiePie” Kjellberg’s YouTube channel featuring videogame compilation videos boasts 27 million subscribers eclipsing all other YouTube personalities according to VidStatsX.
While Google has made it easier for games to post live videogame play online, Twitch still rules the day. Last year, Twitch penned deals with both Sony Corporation (NYSE:SNE) (TYO:6758) and Microsoft Corporation (NASDAQ:MSFT) to allow users to stream from the PlayStation and Xbox with a single click or a voice command.
Twitch was “not on our radar a year ago and [has] emerged out of nowhere,” said Mr. Fisher. It now appears that Twitch is also very much on Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL)’s radar.