Per VentureBeat reports, search giant Google Inc. (GOOGL) has finally reached a definitive agreement to acquire Twitch, a video game streaming company for $1 billion. It has been two months since rumors of a potential acquisition spread. However, neither party was available for any comments.
Twitch, founded in 2011, is a live video broadcasting platform and community for gamers, which boasts over 45 million users per month. It allows worldwide gamers to connect by enabling them to broadcast, watch, and chat from everywhere they play. In November last year, it partnered with Microsoft’s (MSFT) Xbox One and Sony’s (SNE) PlayStation 4, which widely increased its popularity. Additionally, Twitch also distributes shows from gaming and media streaming associates including CBS Interactive’s GameSpot, Joystiq, Machinima Inc. and Destructoid.
If the reports turn out to be true, the acquisition would mark one of the largest acquisitions in Google’s history. YouTube is a leader in both video and music streaming segments, which it had purchased in 2006 for $1.65 billion. The addition of Twitch to its portfolio will further enhance the position as the web's undoubted video streaming leader.
It will give YouTube access to all Twitch’s video partners, thereby boosting its video broadcasting capabilities. Google can also integrate Twitch’s subscription video model to YouTube to reach its goals of capturing a larger portion of the online video gaming market. It will also help Google broaden its efforts to bolster its own lineup of live events on YouTube.
YouTube is rapidly becoming the main growth driver for Google as the company has been taking different initiatives to further expand its video business. In relation to these efforts, Google recently launched the Partner Select program, an interface to connect publishers and ad agencies for video ads. It is a programmatic ad exchange platform for video ads, which will enable publishers monetize their video content. It will also help marketers reach high-quality video content on the web.
The move will help Google increase its revenues from video ads. However, stiff competition in the overall video ad market from companies like AOL (AOL) and BrightRoll remains a headwind.
Google currently holds a Zacks Rank #3 (Hold).
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