Unnamed sources told VentureBeat on Thursday that Google has signed a deal to acquire the popular live-streaming company Twitch for $1 billion. Google’s YouTube division, which was acquired by the search engine giant back in 2006 for $1.65 billion, is handling the actual acquisition.
Rumors of a possible acquisition surfaced back in May. Sources told Variety that YouTube offered an all-cash deal to Twitch, and that both parties reached a preliminary agreement. At the time, the report stated that YouTube was getting ready for the Justice Department to take a long hard look at the deal and determine if it would raise antitrust issues.
Justin Kan and Emmett Shear, co-founders of Justin.tv, launched Twitch back in June 2011. The San Francisco startup allows users to provide live gameplay footage that is streamed from the PC, Xbox One and PlayStation 4. Twitch is also popular in the e-sports market, where it is used to stream coverage from live professional gaming competitions.
The company, which is run by CEO Emmett Shear, sells a $9 monthly ad-free subscription as well as $5 monthly subscription to a single channel. More than 45 million people use the site each month, and more than 1 million subscribers broadcast videos each month. During its peak periods, Twitch accounts for 1.8 percent of North American Internet traffic.
Variety reports that YouTube wants Twitch because the latter company has established a proven model of subscription-based video. YouTube launched its own paywalls back in 2013, offering “channels” from 30 providers, but according to the report, the pay channels have seen very little traffic. The average Twitch viewer watches an hour and a half of gaming each day.
Twitch generates its revenue through ads, and by way of subscriptions, which currently is around 300,000. Since its launch, Twitch has also raised around $35 million in funding from Bessemer Venture Partners, Alsop Louie Partners, WestSummit Capital, Take-Two Interactive Software, Thrive Capital and Draper Associates. Twitch employs around 130 people.
Unfortunately, both Google and Twitch have declined to comment on the alleged deal. However, we’ll likely hear more about the acquisition within the next few weeks.