Marketers Pick Apart Google’s Twitch Purchase

The Internet-based video game ad space has had its shares of ups and downs—as the likes of Zynga have seen revenues plummet. But marketers are not going to give up on a billion-dollar industry.

And Google clearly isn’t. Reports today indicate that the digital giant has finalized a $1 billion purchase of Twitch.tv, a video site that’s become popular with gamers and could serve as a complementary marketing platform for brands in tandem with YouTube ad efforts.

Twitch.tv gets 400 million to 500 million ad impressions a month and a wildly impressive 90-plus percent completion rate. In terms of that latter stat, the industry average is a little less than 50 percent, per media mobile ad serving and analytics company Celtra.

But opinions vary in the industry on just how big of a deal Twitch will be to Google’s sprawling enterprise.

“I think Google/YouTube was already a serious player in video game ads,” said Lewis Ward, gaming industry analyst for researcher IDC. “There has been some grousing that Google is a quasi-monopolist in the area of search of course, an argument that I don’t think holds water by the way. But my point is that since search is a huge piece of the total online ad market, Google is [already] a key ad player in games by default.”

Satish Polisetti, CEO of AdsNative, disagreed.

“I would not say they are a serious player yet,” he said. “Google/Youtube has been all about celebrities to date, and Twitch will be their first move to go more broad into a very engaged community—gamers.”

More than anything, said Corey Weiner, CEO of HyprMX, Google’s purchase shows it is taking content more seriously. Twitch will be “be very important for YouTube’s profitability and revenue growth,” he said. “By acquiring one of the leaders in one of the most popular content categories on YouTube, Google increases its profitability on those content assets. But this presents a problem for other content providers in the gaming video space; Google now controls not only the supply of advertising, but also content and discovery.”

As if Google—which is on pace to rake in $60 billion in revenue this year—needs help. Yet others agree with Weiner that Twitch could make a notable impact on Google financials.

“[The purchase] will only increase their reach to one of the most-coveted advertising audiences on the Internet,” said Michael Anderson, CEO of GameWisp. “By acquiring Twitch, gaming channels will now be looking to Google to distribute and, more importantly, monetize both types of content. The more interesting question is what this means for gaming channels. Gaming channels look primarily to advertising for their revenue, and YouTube has traditionally taken a fairly large share of any revenue generated. With Google controlling both sources of revenue, gaming channels are understandably nervous.”

Ward from IDC compared Twitch’s $1 billion price tag to Facebook forking over $2 billion for Oculus Rift. “Twitch’s audience is massive by comparison,” he said. “I’m a tech analyst not a financial analyst, but in my book either Google got a steal or Facebook overpaid—or both.”

Jay Gould, CEO of Yashi, suggested that Google chief Larry Page has hit a home run.

“It’s unimaginable how large Twitch can grow to by integrating with Google’s Hangouts on Air as well as further deep integrations with YouTube,” he said.

Google and Twitch declined comment.

Per a VentureBeat article, Google’s YouTube team is in charge of the acquisition, which the publication suggested would be announced soon.