The Drum Awards for Marketing - Extended Deadline

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By Noel Young | Correspondent

July 25, 2014 | 3 min read

Google has finally signed a deal to buy game livestreaming firm Twitch. VentureBeat’s Dean Takahashi is reporting that he’s confirmed it with his sources, who say the deal is worth $1 billion.

SiliconBeat.com admits, “We don’t know everything about this deal, such as when it will be announced and the exact purchase price.

“But We do know that Twitch investors who participated in past rounds are pleased that they will be getting significant returns that are multiple times the amount they originally invested.”

News of the deal comes just days after the end of this year's International, the Dota 2 tournament (which was streamed through Twitch) . This offered a record prize pool of more than $10 million.

Twitch is the United States' largest live-streaming website by far, according to a report in April. The popularity of esports has risen dramatically; last year alone, more than 2.4 billion hours of esports content were viewed through services like Twitch.

The deal underscores the value of live Internet streaming and the rise of competitive gaming as a spectator sport, says Silicon Beat — "something that draws millions of viewers, can offer prize pools that surpass pro golf’s marquee events, and provides a multibillion dollar opportunity for advertisers."

Google and Twitch declined comment. This deal was first cited by unnamed sources in Variety and reported in the Drum back in May.

The story then was that Google had made an all-cash offer and that the deal could be announced soon.

Google’s YouTube division is said to be in charge of the acquisition, which would transform YouTube’s business. Google bought YouTube in 2006 for $1.65 billion.

San Francisco-based Twitch enables people to broadcast their own gameplay sessions on the PC, Xbox One, or PlayStation 4 to online viewers.

Competitive gamers and average players "can gain fleeting fame by entertaining those spectators, who sometimes number in the millions," says SiliconBeat.

In March, Twitch represented 1.35 percent of all Internet traffic, according to Sandvine.

Twitch has more than 50 million monthly active users and more than 1.1 million members who broadcast videos each month. Back in June 2011, Twitch had just 3.2 million monthly active users.

YouTube is the No. 1 platform for Internet video, serving more than six billion hours of video per month to 1 billion users worldwide.. But most of those videos are uploaded.

Twitch was begun in June 2011 by Justin Kan and Emmett Shear, cofounders of Justin.tv. The site was one of the first to host livestreams, or real-time videos of something that was happening at that moment. Shear is still CEO of Twitch.

SiliconBeat says the deal makes a lot of sense for Google. Here’s what they wrote back in May:

“More than 45 million fans visit Twitch.tv each month, where they watch live webcasts of other people playing their favorite video games. The number has more than doubled over the past year, according to Twitch, which makes money in part from showing ads … "The site’s audience is dwarfed by the billion-plus individuals who visit Google’s YouTube each month, but visitors stay on Twitch for hours, rather than watching a few minutes of clips and moving on.”

Mark Fisher, a vice president at Qwilt, which sells networking technology and tracks streaming patterns said : “When it comes to engagement, these fans are maniacal.”

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