It sounds like the worst nightmare of a 21st-century parent. Not only are the kids addicted to video games, they aren’t even playing the games themselves. Instead, they’re sitting in front of the computer watching other people play. Where, oh where, did we go wrong?
Yet that is precisely the wrong way to look at Twitch.tv, a three-year-old start-up that, according to Variety, may be about to be bought by Google for $1 billion. (The Wall Street Journal reports (paywall) that the deal is far from done; Google and Twitch both declined to comment to Quartz.) That price tag may come to be seen as a bargain as live-streaming online games takes off.
Here’s why the deal makes sense: Last year, some 15 million people watched Major League Baseball’s World Series. More than twice as many watched the Season 3 World Championship of League of Legends, a multiplayer online game set in a fantasy world, on Twitch.tv. According to Twitch, the site receives some 45 million unique visitors every month (on a par with some of the largest news websites), who watch a combined 13 billion minutes of gameplay.
For some perspective, Twitch’s audience is more than twice the 20 million unique visitors YouTube recorded in 2006, when Google bought it for $1.65 billion ($1.95 billion in 2014 dollars). With Google’s help, YouTube now records a billion unique visitors every month and, according to insiders, accounts for at least $5 billion of Google’s $55 billion in annual revenue, a number that has been doubling year on year.
Could Twitch grow just as big? There are two reasons to think that’s not out of the question. The first is well articulated by Johnathan “Fatal1ty” Wendel, a professional player of first-person shooter games: “For gamers, Twitch is like our ESPN. It’s also a social hangout, a place where we connect with millions of other gamers who share our passion.” Like YouTube, Twitch is a video-sharing site that is also a social network. Both of those things are valuable to Google (and indeed to other big internet companies in the advertising/data business.) And it’s an increasingly respectable pastime. Huge tournaments are held for competitive gaming and the US government even issues professional athlete visas to the players.
Second, Twitch dominates live-streaming in the US by a large margin, according to Qwilt, a video and networking company. Live-streaming is still a small segment of online video compared to on-demand services such as Netflix or YouTube, but it’s becoming increasingly popular as TV news channels and sports organizers try to reach a wider audience through the web. If Twitch can become the site people associate with live-streaming in the way they associate YouTube with on-demand video, it could prove a very valuable property indeed—and Google would be just the kind of owner that could make that happen.