Business Take: Why YouTube Buying Twitch for $1 Billion Makes Sense

While the service is very popular is it legal and is YouTube the best home for it?

May 28, 2014 at 1:10PM

The rumored sale of Twitch to Google's (NASDAQ:GOOG) YouTube for $1 billion has gamers concerned and non-gamers wondering what the site does.

"The number one thing that Twitch has going for it is they produce millions of hours of content," said host Jason Hellmann on Business Take, the show that gives you the Foolish perspective on the most important business stories of the week. "That should be appealing to Google because they are in the ad sales business. They are not in the search business, they are in the business of selling ads."

Most important for YouTube is that content on Twitch is largely user-generated. The experts and others playing the games create everything from gameplay videos to shows about gaming. This content does not cost Twitch a dime up front. Instead the company shares ad revenue or subscription dollars with the content creators. This is very similar to YouTube's own model. The gameplay recording function is actually built into the current generation of consoles including Microsoft's (NASDAQ:MSFT) Xbox One and Sony's (NYSE:SNE) PlayStation 4 making it incredibly easy for even casual players to make videos to share.

"I get that this becomes a ton of free content for YouTube, but I question is there a legality issue?" Business Take panelist Daniel Kline asked Hellmannn. "Can Microsoft come in and say 'No, I own Halo, you're not allowed to share this.'"

"There has been one company that has had a run-in with streamers. Nintendo (NASDAQOTH:NTDOY) had requested that YouTube take some videos down," he said. In general though the game publishers have encouraged sharing videos. Many of the popular games covered by Twitch users are on a free-to-play model. These are games where people can play for free earning their way to various rewards. Those rewards can also be purchased so the publishers want as many people playing as possible in order to drive revenue.

Gameplay gets so competitive that competitive tournaments can draw millions of viewers. The League Championship Series -- the Super Bowl of League of Legends -- had 32 million viewers.

Rumors persist that Microsoft was also bidding for Twitch, which would have raised the possibility of Sony locking out the service and going with a lesser competitor (the other players in the field are much smaller); Hellmann sees YouTube and Google as a much better fit.

"Google is in the content business. Microsoft is in the software business," Hellmann said. 

Do you watch Twitch? Is YouTube making a smart decision? Should Microsoft have paid more? Share your thoughts and comments below.

Your cable company is scared, but you can get rich
With so many ways to consume content -- include Twitch, you know cable as we know it is going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 


Daniel Kline is long Microsoft. Jason Hellmann has no position in any stocks mentioned. The Motley Fool recommends Google (C shares). The Motley Fool owns shares of Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers