What the YouTube-Twitch Merger Really Means

Yesterday we reported on the long-awaited acquisition of live streaming platform Twitch by everyone’s favorite video giant, YouTube. The Google-owned company reportedly laid down a cool $1 billion to make things official. YouTube and Twitch are the Ross and Rachel of the online video world, and industry watchers, gamers and YouTubers have all been watching their will-they-or-won’t-they dance for months. Now they’ve finally made it official with a price tag that makes this the biggest online video acquisition in recent memory by a large margin.

Even before today, YouTube and Twitch had been working closely together. Here at NMR we speculated back in June that the two companies were planning to join up when YouTube introduced Twitch broadcast alerts to their service. There’s no reason for YouTube to steer traffic off of its own site unless their destination is about to be YouTube-owned. The two platforms are naturally complementary. YouTube hosts recorded video content from gamers, and Twitch allows those same gamers to live-stream their gameplay to fans.

While there are obvious synergies between the two platforms, that still leaves the question of why YouTube felt the need to drop $1 billion dollars to own their partner outright. Gaming is one of the fastest growing content verticals in online video. Many of YouTube’s gamers were also using Twitch to develop their audience and expand their reach. Bringing those services in-house gives YouTube a virtual monopoly on this type of gameplay content and shuts out potential rivals like Yahoo Screen, who have shown an interest in wooing YouTube talent.

Unfortunately, that advantage could turn out to be the very thing that slows down the deal. YouTube is currently the most popular online video platform in the United States, while Twitch is the most popular live-broadcasting platform. Regulators may see the combination of the two as a threat to competition in the online video space. The result could be months of delay as lawyers fight out the details in court. Many suspect this is why the deal came about so slowly in the first place, with Google’s lawyers taking their time to prep for the eventual legal challenge.

Outside of the courtroom, the impact of the deal will primarily be felt by YouTube gamers and Twitch broadcasters, both of whom will be entering a new world. While YouTube content creators will likely benefit from a smoother integration between the two services, Twitch broadcasters may have a bit more culture shock in store for them. Among gamers, Twitch is generally regarded as having less stringent content ID standards, unlike YouTube, which recently angered many of its gaming partners by getting more aggressive with takedowns of copyrighted games. While Twitch natives will certainly benefit from the resources and audience development work of YouTube and Google, there will definitely be an adjustment period.

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