Why Google's Billion-Dollar Bet on Twitch.tv Looks Brilliant

More than 45 million tune in each month to watch gameplay on twitch.tv. Credit: Twitch.tv.

Variety cites unnamed sources who say YouTube has a prelimiary agreement to acquire Twitch.tv for $1 billion in cash. Should Google's (NASDAQ: GOOGL  ) (NASDAQ: GOOG  ) investors cheer the deal? Or is the search king overpaying for what amounts to yet another video game channel?

Guest host Alison Southwick puts these questions to Fool analysts Nathan Alderman and Tim Beyers in this week's episode of 1-Up on Wall Street, The Motley Fool's Web show in which we talk about the big-money names behind your favorite movies, toys, video games, comics, and more.

Nathan calls the move "brilliant," arguing that Twitch.tv, which allows gamers to broadcast in-game action live, folds neatly into Google's strategy of acquiring content it can monetize with ads. Better yet, since Twitch.tv is available to both Xbox One and PS4 players, Google gets to cash in on next-gen console gaming without developing any new hardware of its own.

But is $1 billion too much to pay for Twitch.tv? Not when you consider growth, Nathan says. Twitch.tv more than doubled its average monthly viewership to 45 million last year. GeekWire calls the site "ESPN of video games" for how the service provides live coverage of competitive video gaming. Whereas no one except for Mark Zuckerberg knows how Facebook (NASDAQ: FB  ) plans to cash in on its $2 billion purchase of Oculus VR, it's easy to see Google cashing in on billions of new gaming streams flowing through YouTube.

Tim agrees, noting that his youngest son already watches homemade YouTube videos of Minecraft gameplay. Twitch.tv would merely extend and enhance his viewing experience. Google, meanwhile, could offer Twitch.tv the necessary resources to make good on plans to expand coverage to mobile gameplay.

Now it's your turn to weigh in using the comments box below. Do you see Twitch.tv adding value to YouTube? Why or why not? Click the video to watch as Alison puts Nathan and Tim on the spot, and then be sure to follow us on Twitter for more segments and regular geek news updates!

How to find an invest in the next great growth story -- before the rest of the market does
Every investor wants to get in on revolutionary ideas before they hit it big. The problem is, most investors don't understand the key to investing in hypergrowth markets. Want to learn how? Our new special report reveals the process for investing in early stage disruptors while introducing you to one stock that's aiming to reshape a $14.4 trillion industry. Click here to get the full story in this eye-opening report.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2970942, ~/Articles/ArticleHandler.aspx, 11/23/2014 11:14:38 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement