Google is no stranger to big money buys, from YouTube almost eight years ago to this year’s $3.2 billion  purchase of Nest.

Twitch.tv/iplaywinner . I'm out of tournament ...

Gamers watch gamers on Twitch.tv/iplaywinner (Photo credit: besighyawn)

Rarely does YouTube itself hit the headlines with acquisitions, thought the opposite is true this week as rumors circle that the dominant video platform will buy Twitch for more than $1 billion.

What is Twitch, you might ask?

Well that’s where things get interesting, especially to those of us trying to predict the next evolution of online entertainment.

 

Watch, Don’t Play

If older generations fail to understand the allure of playing video games, the trend led by Twitch will almost certainly provoke just that reaction.

The site connects video gamers who like to live stream their gaming sessions with viewers around the world who love to watch them play.

If that sounds like a niche market to you, think again. With more than 44 million users watching around 100 minutes of live stream gaming every day, Twitch is winning the battle for online attention without many traditional players even realizing it’s competing.

Those enormous viewing figures come after just a few years developing the platform and are reminiscent of YouTube’s early acceleration. The difference is that Twitch exists in a more mature online entertainment environment, making the fact that it has broken through all the more impressive.

 

An Unexpected Entertainment Empire

YouTube has obviously dominated online viewing for years, but until recently it has largely been a boon to broadcasters and the wider entertainment industry, rather than a competitor. The music industry has found success in rolling out Vevo inside the YouTube ecosystem, and movie studios have found a rabid audience to eat up their movie previews, fueling attention for upcoming box office attractions with little effort.

Michelle Phan and Felicia Day

Michelle Phan (left) is a celebrity born of YouTube (Photo credit: Digitas Photos)

Recent moves to promote independent YouTube entertainers like Michelle Phan and Shane Dawson, combined with the relatively unexplored territory that comes with Twitch, could change that.

Advertising is likely to remain the site’s mainstay revenue for some time to come, but the trends towards original content is opening up doors that few expected. Even though the likely motivation to produce such programming and integrate audiences like those from Twitch is to attract even more eyeballs for ads, this is an important development in how online video platforms position themselves.

Given the tens of billions spent on U.S. advertising every year and the evergreen allure of the younger demographics that it attracts, Twitch may prove to be a bargain if Google acquires it for the rumored price.

 

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