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Why a Google-Twitch Deal Would Stand Out Amid Web-Video Consolidation
- Gamer Jayson Love’s streams on Twitch feature him in front of a green screen on which he superimposes the game, MANvsGAME.
- Twitch screenshot
Disney bought Maker Studios for up to $950 million in March, Dreamworks Animation acquired AwesomenessTV last year for up to $117 million, and Warner Bros. led the recent investment round in Machinima.
Meanwhile Fullscreen has attracted acquisition interest from several companies including AOL and YahooYHOO +1.44%.
Behind the consolidation, big media companies are hunting for elusive teen viewers, which today spend much of their time watching Web video on sites like YouTube, or in the case of videogame enthusiasts, Twitch. The big media companies can then groom the online personalities that have attracted those audiences and bring them to their other distribution channels.
A Twitch deal would be unique for a couple reasons. First of all, unlike all of the targets above, it isn’t a so-called “multi-channel network.” The MCNs are talent agencies of sort, recruiting popular YouTube stars and helping them sell ads next to online clips in return for a fee. Twitch is more like YouTube itself, offering its own content, which in its case is primarily live streams of people playing or discussing videogames.
And this time it doesn’t involve Big Media grabbing a stake in YouTube talent, but GoogleGOOGL +1.66% itself looking to bolster its own content offerings.
Google may be interested in Twitch for its high user engagement and the potential to sell premium video ads. Think of the videogame content on Twitch like sports content on TV, says Seth Bardelas, Head of Agency Development for advertising software firm TubeMogul. Advertisers pay big for sports on TV because they know viewers typically watch live — making it harder to skip ads. Twitch viewers are watching live game play for “hours on end,” Bardelas says.
Indeed, gameplay on Twitch has become a spectator sport. A Journal story in November spotlighted a man in Billings, Mont., who hosts a Web show on Twitch called “MANvsGAME,” in which he plays videogames to an audience of thousands. He said then it was possible he’ll earn more than $100,000 between advertising and subscribers paying $5 per month to watch.
In Bardela’s previous role as vice president of global brand strategy at Machinima, which had a deal to put its own videogame content onto Twitch, Bardelas says the engagement of viewers helped Machinima charge a premium for Twitch ads.
In February, Twitch said it had more than 45 million monthly unique visitors, including one million people who create and stream video content on the site.
Facing its own issues with low-priced advertising, the result of having an almost unlimited supply of videos, Google might be looking for higher value inventory.
The consolidation may not end soon, especially as other online heavyweights like Yahoo are looking to beef up their own online video offerings to compete with YouTube, not to mention other traditional media players like Viacom that may still be looking to improve their online content offerings.
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