YouTube Makes Move at Twitch Dominance with Exclusive Deal

In a bold move following the lukewarm reception of its Stadia gaming platform, Google is looking to push into the esports world through a partnership with one of gaming’s biggest names.

On Friday (January 24), YouTube confirmed it would become the exclusive streaming home to some of the most popular gaming events as part of a partnership with Activision Blizzard (NASDAQ:ATVI), the developer of popular esports titles including Overwatch and Call of Duty.

The agreement is a multi-year deal that will see live broadcasts of the games attached to the video game maker exclusively streamed on YouTube worldwide, excluding in China.

With the new deal, YouTube will be replacing Twitch as the exclusive streaming platform of the Overwatch League. In 2018, Twitch signed a two-year deal to stream all of the events for the popular gaming league.

As a part of the deal, Activision will also be using the processing power of Google Cloud to provide hosting infrastructure for its online gaming operations.

YouTube is a division of Google, which is owned by the public conglomerate Alphabet (NASDAQ:GOOGL).

The two companies both took similar hits following the announcement of the deal. Prices for Google and Activision dropped 2.4 percent and 2.3 percent receptively from market close on Friday to market open on Monday (January 27).

Sunil Rayan, head of Google Cloud’s gaming division, said the relationship between Google and Activision has been years in the making, during which time Google worked on Activision’s mobile titles to boost analytic capabilities and player experience.

“We are excited to now expand our relationship and help power one of the largest and most renowned game developers in the world,” Rayan added.

Activision also launched the Call of Duty League on Friday with 12 teams competing in Minnesota, and the Overwatch League’s 2020 season is set to start in February.

Membership on one of the Call of Duty League teams comes with a base salary of US$50,000, as well as healthcare and retirement benefits, according to Business Insider.

Ryan Wyatt, head of gaming at YouTube, said in a press release that over 200 million gamers use the website to watch over 50 billion more than 50 billion hours per year of gaming content, such as esports matches and events.

Though the streaming platform Twitch, operated by Amazon’s (NASDAQ:AMZN) subsidiary Twitch Interactive, has maintained dominance over the space, deals made by its competitors have begun to slowly dig into its market share.

The Q4 Year in Review Live Streaming Industry Report released by Streamlabs and Newzoo in January noted that Twitch’s viewership had dropped 9.8 percent to 2.3 billion in Q4 2019 from 2.55 billion in Q3 2019. The Q4 results were also a year-over-year low.

Mixer, a streaming service owned by Microsoft (NASDAQ:MSFT) and a relative newcomer into the space, has been gaining on Twitch as the streaming wars rage on.

From 2018 to 2019, Mixer more than doubled its number of hours watched and streamed, and it currently has nearly the same amount of unique channels as Twitch.

YouTube Gaming Live has also made up ground in the streaming race and was the only platform that saw increases across the board in hours watched, hours streamed and concurrent viewership in Q4, the report indicated.

Both Mixer and YouTube Gaming Live have also nabbed some of Twitch’s largest streamers. Recently Mixer signed exclusivity agreements with Tyler “Ninja” Blevins and Michael “Shroud” Grzesiek, while YouTube snatched Lannan “LazarBeam” Eacott, Elliott “Muselk” Watkins and Rachell “Valkyrae” Hofstetter.

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Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.