Twitch Is a Billion Dollar Surprise, Even for Video Insiders
When reports emerged that Google would acquire Twitch for $1 billion, even many in the online video industry hadn't heard of it. How is that possible?
Learn more about the companies mentioned in this article in the Sourcebook:
Early on in his keynote at this year’s Streaming Media East conference, Twitch senior video encoding engineer Matthew Szatmary asked how many in the crowd had heard of his company, which streams live videos of video game play. Fewer than half of those in attendance raised their hands.
Five days after that keynote (and just before this issue of Streaming Media went to press), Variety reported that Google was in talks to buy Twitch for $1 billion. If Szatmary had asked for a show of hands now, the response would’ve been more enthusiastic. Clearly, Twitch -- which grew out of Justin.tv, one of the very first live streaming services on the market -- is a big, big deal.
So how is it that, in a room full of online video experts at a trade show and conference dedicated to streaming media, less than half of the people even knew who Twitch was? Sure, if you’re not a gamer, the notion of watching someone else play a video game might seem about as exciting as watching paint dry. But gaming isn’t exactly ultra-longtail content, and Twitch recently delivered more than 8 million concurrent streams of a League of Legends championship; compare that to the peak of more than 800,000 concurrent streams during the Sochi Olympics.
And on a regular basis, Twitch accounts for more peak internet traffic than many better-known online video sites. According to a Deep Field study reported in the Wall Street Journal in February 2014, Twitch made up 1.8 percent of U.S. peak internet traffic; Hulu came in at 1.7 percent and Amazon at 1.2 percent. Twitch boasts more than 45 million unique viewers per month, more than a million unique broadcasters per month, and 106 minutes watched per viewer per day.
As Szatmary reeled off these numbers, and then went deep into the technical machinations of the site -- and boy, was it great to have an encoding expert rather than a marketing type give a keynote -- you could feel the prevailing mood in the room at the Hilton New York shift from “Who is this guy?” to “This is great!” Here was a company that found a niche content area, staffed up with people who were passionate about that content and about online video, and turned into a business that generated both advertising and subscription revenue and garnered VC investment to the tune of $35 million.
The word “disruptive” gets thrown around so cavalierly at tech and content conferences that it’s almost lost its meaning, but Twitch is worthy of the label, almost as much as YouTube was when Google acquired it back in 2006 for $1.65 billion. Today, YouTube and Google are the old guard, and the Twitch acquisition would give them a huge credibility boost in an area where they already have a strong foothold; gaming is second only to music in popularity on YouTube.
Of course, that credibility might not materialize if YouTube has to apply the same restrictive content ID system to broadcasters on Twitch, who often have music blasting in the background as they play their games. A key to Twitch’s success has been a hard-to-maintain balance between user freedom and user support; the former is a hallmark of both YouTube and Google, the latter not so much. Time will tell -- and, of course, by the time you read this, it might turn out that the reports about the acquisition were nothing more than rumors.
Whether or not it sells to Google, Twitch’s success should serve as a wakeup call to all of us in the online video industry that, even as we pay well-deserved attention to the major broadcasters and mainstream OTT services, the real innovation is often happening elsewhere. We can’t ignore the establishment, but more than ever, we neglect the upstarts at our peril.
This appears in the June 2014 issue of Streaming Media under the title “Video Games.”
Delivering far more concurrent video streams than the Olympics, Twitch is bringing social gaming and easy broadcasting to a global audience.
Account holders are given no advanced notice, and are directed to Twitch, YouTube, or competing live video services.
Were the unnamed sources mistaken or did Google back out? And why would shopping giant Amazon want a video game network?
For anyone over a certain age it's still hard to comprehend: People make a living playing video games? Yes, and the best make a lot.
Esports are the streaming industry's best-kept secret, but recent developments suggest they're quickly taking center stage.