In what would be the latest in a string of big-ticket tech acquisitions and mergers in Silicon Valley, Google's YouTube is reportedly close to a deal to buy Twitch, a popular video game streaming company, for a price topping $1 billion.
Citing anonymous sources, Variety reported on Sunday that the deal would be the biggest in YouTube's history. YouTube was acquired by Google in 2006 for $1.65 billion. The reported acquisition seems to be a match for the services: YouTube is the No. 1 platform for Internet video, while Twitch has become increasingly popular for gamers.
Twitch, a San Francisco startup launched in 2011, has quickly become one of the leading live-streaming services in the U.S. According to Qwilt Video Analytics, Twitch rocketed to the top of the list during the week of April 7 -- taking 43.6 percent of the live-streaming market -- quickly outpacing its parent company's original site, Justin.tv.
Variety reported Sunday that a deal was imminent, but the sources told the Wall Street Journal that it was too early in the talks to tell and that a price could not be confirmed.
YouTube already has a similar service that allows gamers to live-stream, in addition to music videos, sports, news and special events such as Felix Baumgartner's supersonic jump. However, Qwilt's vice president of business development told the Wall Street Journal that the site lacks engagement, which is where Twitch is strong. "Google can try to build this on its own or they can buy something that's already out there and doing well," Mark Fisher told the paper.
In March 2014, Twitch represented 1.35 percent of all downstream Internet traffic, according to network equipment vendor Sandvine. According to that same report, YouTube had gotten 13.2 percent of downstream traffic in March -- a decrease from 18.6 percent in the second half of 2013.
Video-game related videos are also the second most popular on YouTube, according to VidStatsX. A YouTube channel that features video game montages has 27 million subscribers -- more than any other channel, including those featuring music videos by celebrities like Rihanna and Katy Perry.
Twitch reportedly has 45 million monthly users and a million members who post videos each month, according to Variety. A spinoff of Justin.tv, a website that hosts a variety of user-generated live-streams -- including entertainment, poker and sports -- gaming was just a category, until its founders noticed how popular gaming was. As a result, in 2011, Twitch was spun-off from Justin.tv and it became so popular that the parent company was renamed Twitch Interactive earlier this year.