After Passing on Twitch, Google Inc Launches YouTube Gaming

By Markets Fool.com

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For a while there, it really did look like Google was going to scoop up Twitch and roll the service under its YouTube umbrella.

It made perfect sense since YouTube has long been the top destination for online video, and Twitch was doing incredible things in the world of video game livestreaming. News broke last year that Google and Twitch were closing in on a $1 billion deal, but at the last minuteAmazon.com swooped in and scooped up Twitch for $970 million.

Google and Twitch reportedly had antitrust concerns and couldn't agree on a potential breakup fee if the deal fell through, so Google walked away. Amazon was happy to seal the deal, though, and might even now be working on creating a new live video offering, which would surely leverage the livestreaming technology and talent that it acquired. Clearly, Google is cognizant of how big video game livestreaming has become. Consider Twitch's breathtaking growth over the past three years in a wide range of key operating metrics.

Metric

2012

2013

2014

Unique viewers per month

20 million

45 million

100 million

Minutes watched per month

6 billion

12 billion

16 billion

Unique broadcasters per month

300,000

900,000

1.5 million

Total videos broadcast per month

3 million

6 million

11 million

Partnered channels

3,400

5,100

10,000

Source: Twitch.

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It was just a matter of time before Google built its own competing service to get a piece of the action. Enter YouTube Gaming.

1 Up on Twitch?
YouTube Gaming is a brand-new app and site distinct from the main YouTube. That will ensure viewers can find game-specific content when searching. YouTube has put together a new interface that involves three ways to find content: games, feed, and channels.To start, YouTube Gaming will have dedicated landing pages for over 25,000 games, which will display related channels and creators such as game companies. The service launches later this summer and will be available on desktop and mobile.

YouTube Gaming's new apps. Source: YouTube Gaming.

The new service will actively make recommendations based on user preferences, including channel subscriptions. Broadcasters will be able to interact with viewers through chats. In many ways, YouTube Gaming will replicate everything that Twitch has going for it.

YouTube Gaming's interface. Source: YouTube Gaming.

Just a few years ago, you could argue YouTube had an advantage in terms of brand strength, but nowadays Twitch has carved out a very strong brand within its unique niche.

Ready. Set. Fight!
This will indeed be an intense competition to watch unfold in the coming months and years. Twitch's success has caught many industry watchers by surprise. Who thought there would be such a massive audience to watch other people play video games?

Twitch was acquired at the perfect time, just as it was entering hyper-growth mode. The company still operates independently, but now has access to Amazon's much deeper pockets. Livestreaming is capital intensive due to the high amounts of bandwidth required, while Amazon Web Services wields unrivaled cloud infrastructure.

Here's Twitch CEO Emmett Shear when he announced the acquisition last August.

Today, I'm pleased to announce we've been acquired by Amazon. We chose Amazon because they believe in our community, they share our values and long-term vision, and they want to help us get there faster. We're keeping most everything the same: our office, our employees, our brand, and most importantly our independence. But with Amazon's support we'll have the resources to bring you an even better Twitch.

Amazon and Google are already two mighty contenders that compete across a wide range of verticals. We might as well add livestreaming to the mix.

The article After Passing on Twitch, Google Inc Launches YouTube Gaming originally appeared on Fool.com.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.