What to Make of a Potential YouTube-Twitch Deal

On Sunday night, Variety reported that YouTube was about to acquire video game streaming site Twitch for more than $1 billion.

The deal may not be as imminent as that initial report suggested. While sources told The Verge that an acquisition is close, the Wall Street Journal reports that the negotiations are still in an early stage. As of Monday afternoon, Twitch and YouTube haven’t announced anything.

Nonetheless, some in the gaming community are in panic mode at the thought of another beloved service being swallowed whole by a tech titan. We did, after all, just go through this with Facebook and Oculus VR. To help understand what the big deal is, let’s consider what we know about Twitch, YouTube and YouTube’s corporate masters at Google to figure out what an acquisition might mean:

What is Twitch?

Twitch lets anyone stream video games in real-time, with their own live commentary on top. It’s used for everything from huge gaming competitions (such as the yearly Evo fighting game tournament) to amateur broadcasts, some of which have become hugely popular. At first, broadcasters needed special video capture software to stream games from their PCs, but new apps for the Xbox One and PlayStation 4 make it easy to broadcast from those consoles directly.

In addition to the basic video feed and commentary, each stream has its own chat room, where users can comment on streams as they happen. The Twitch Plays Pokemon phenomenon from earlier this year made extensive use of this feature, allowing commenters to dictate every move in the game. Using Twitch isn’t just about watching other people play video games; it’s about hanging out with people around a set of common interests.

Why would Google/YouTube want that?

The problem with YouTube is that people tend to swing by for short video clips, and they have little patience for ads. As the Wall Street Journal points out, Twitch users will watch videos for hours on end, which means plenty of opportunities to advertise, and at premium rates.

Perhaps more importantly, Twitch may be the closest thing YouTube has to a threat. Google buying Twitch would be kind of like Facebook buying Snapchat (which almost happened) or Instagram (which did happen). Even if they aren’t direct competitors, they are competing for the same audience attention and ad dollars.

Would Twitch get shoehorned into Google+, then?

Probably not. If recent rumors are accurate, Google has realized the error of trying to ram its own social network into every product, like it did with YouTube last year. By that logic, Google should be smart enough to leave the Twitch community alone.

But that doesn’t mean Google wouldn’t be interested in tracking Twitch users for advertising purposes. Some sort of optional Google-based sign-in or account link would be a safe bet if this acquisition went through. (Here’s a hypothetical: Sign in with your Google account during Evo and get the HD stream for free, instead of having to buy a $12 ticket.)

Would the Google-Microsoft rivalry spell doom for Twitch’s Xbox apps?

Again, probably not. Google only skips platforms when it thinks they’re too small to invest in, which is why there are no official YouTube apps for Windows 8 or Windows Phone. But there are YouTube apps for Xbox 360 and Xbox One, which means Google thinks Microsoft’s consoles are large enough not to ignore.

Just don’t expect an official Twitch app for Windows Phone anytime soon (although the unofficial LiveGaming app is pretty good.)

What’s the potential upside?

As in any acquisition by a big tech company, additional resources are the most obvious benefit. Twitch could tap into Google’s massive data centers to keep things running smoothly, and could make a bigger effort to improve its mobile apps. Chromecast support, with the ability to chat through your phone or tablet while watching a stream on TV, could be pretty awesome. An acquisition by Google could put mobile game streaming on the fast track, especially for Android.

And the downsides?

Twitch’s dominant position in live game streaming would be firmly established, and YouTube would have even less competition than it does now. If the combined companies make a bone-headed decision–requiring everyone to use a real name, for instance–you’d have nowhere else to go. And in a way, it’s just sad to see that the endgame for another small but fast-growing company is to get bought by a huge corporation.

The potential acquisition also raises some questions: How would game publishers respond? Could this be the start of a copyright mess, as publishers try to get their pound of flesh from Google? Would Twitch eventually try to move beyond games to other forms of entertainment, and would that end up watering down the gaming aspect?

If there’s one thing we can count on, it’s that Twitch would follow the usual pattern of major tech acquisitions, and promise that it won’t be royally messed up by its new overlords. But it doesn’t always work that way. All Twitch users can do right now is wait, and hope for the best.