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YouTube to Acquire Videogame-Streaming Service Twitch for $1 Billion: Sources

By Andy Marken

Googleâ•˙s YouTube has reached a deal to buy Twitch, a popular videogame-streaming company, for more than $1 billion, according to sources familiar with the pact.

The deal, in an all-cash offer, is expected to be announced imminently, sources said. If completed the acquisition would be the most significant in the history of YouTube, which Google acquired in 2006 for $1.65 billion. The impending acquisition comes after longtime Google ad exec Susan Wojcicki was named CEO of YouTube earlier this year.

Reps for YouTube and Twitch declined to comment.

San Francisco-based Twitch lets users upload and watch free, live gameplay videos that can be streamed from Microsoft Xbox One and Sony PlayStation 4 consoles, and also sells a $9 monthly ad-free subscription and subscriptions to individual channels for about $5 per month. The company claims to have more than 45 million monthly users, with more than 1 million members who upload videos each month. It also has deals to distribute shows from partners including CBS Interactiveâ•˙s GameSpot, Joystiq and Destructoid.

YouTube is preparing for U.S. regulators to challenge the Twitch deal, according to sources. YouTube is far and away the No. 1 platform for Internet video, serving more than 6 billion hours of video per month to 1 billion users worldwide, and the company expects the Justice Department to take a hard look at whether buying Twitch raises anticompetitive issues in the online-video market.

Twitch was launched in June 2011 by Justin Kan and Emmett Shear, co-founders of Justin.tv, one of the first websites to host livestreaming user-generated video. Shear currently serves as CEO of Twitch.

Founded in 2011, the startup has raised about $35 million in funding. Investors include Bessemer Venture Partners, Alsop Louie Partners, WestSummit Capital, Take-Two Interactive Software, Thrive Capital and Draper Associates. Twitch Interactive, which includes Justin.tv, has about 130 employees.

Gameplay videos already are a highly popular category on YouTube. Twitch also plays in the separate ╲e-sports╡ market covering live professional gaming competitions; others in that space include tournament organizer Major League Gaming, a New York-based company whose investors include Oak Investment Partners and Relativity Media CEO Ryan Kavanaugh.

In March 2014, Twitch represented 1.35% of all downstream bandwidth on North American fixed-access broadband networks – nearly triple from last fall, according to bandwidth-equipment company Sandvine.

www.markencom.com

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