What is Twitch and why is it worth $1bn?

(Source: Twitch)

Google is reportedly swooping for three-year-old video game streaming service Twitch with an offer of more than a billion dollars.

While watching other people play video games might not sound like a big business opportunity, it's an industry that has grown rapidly in recent years with Twitch playing a key role in boosting its popularity.

So-called eSports, where professional gamers play competitive matches for often considerable cash prizes, has become big business with its worldwide audience doubling to 71.5m viewers watching matches last year and its total prize money reaching $25m.

(Source: Twitch)

Meanwhile big-name sponsors like Intel and Red Bull have jumped onboard to sponsor talented players who compete in games of Valve’s Dota 2 or Riot Games’ League of Legends – both of which had prize pools of over $2m in 2013.

(Source: SuperData Research)

While South Korea has historically been the heartland of eSports – the Korean eSports association was founded by the South Korean government in 1999 – its popularity has now spread worldwide with over half the viewership of competitive matches coming from the US.

Twitch, launched in 2011, has grown to become the YouTube of eSports, a platform on which professional players record, upload and stream their matches for millions of fans around the world to watch, at the same time increasing the awareness of eSports.

And for Google’s advertisers the appeal is obvious. While YouTube remains the number one destination for online video, the average eSports viewer now watches 19 matches a month with a typical viewing length of 2.2 hours.

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