Who would have thought that a network that enables gamers to watch other gamers play in a live stream would become a potential target for Google’s M&A guys? Who would have thought that e-sports would reach the level of popularity and professionalism it has reached? Who would have thought that the gaming industry would put the music and movie industry to shame? Face it, gaming is for real and so are the revenues generated in and around gaming.
So now Twitch is desirable to Youtube/Google, because people like to watch others play, to learn how to play or just to be entertained. Many people (45 Mn monthly users, male 18-29, avg. view time 106min). Twitch is integrated into xBoxOne and PS4. What better place to target a gaming audience with games-related ads?
One factor seems more interesting than ad revenue: the social aspect. You listen to your favorite gamer commenting his progress in a game. As Forrester Research analyst James McQuivey puts it: “The trick will be finding those genres where the match between interested viewer, obsession for the content and passion for connecting with others socially all line up as elegantly as they do for gamers.” Who is to say that the Twitch model won’t work for broadcast TV content?
Rumour has it that Twitch is priced at $1 Bn in cash.
Speaking at the J.P. Morgan Global Technology, Media and Telecom Conference, AT&T CFO John Stephens said that the DirecTV deal will provide the two companies with the opportunity to deliver a superior video product by giving them the chance to streamline set-top box development and improve the quality of the user interface.
Stephens promises the best of both worlds (AT&T’s U-Verse and DirecTV’s satellite offer) for TV/video customers following the $48,5 Bn takeover. He expects the new company to have a great deal of leverage when it comes to content negotiations, since they now provide an audience of nearly 70 Mn viewers. This expectation will be put to the test in the current negotiations with the NFL for exclusive sunday broadcast rights.
In a more critical view on the merger, Neil Begley of Moody’s states that AT&T’s wireline network and the DirecTV satellite network will not be able to be integrated and AT&T’s wireline network will require more fiber optic investment in the last mile to be competitive in the long-term.
Media analyst Craig Moffett predicts some regulatory obstacles the new media giant will have to take: The consolidated pay-TV customer base of 25 Mn won’t be a problem. However in some markets where DirecTV and U-verse are the only alternatives to cable – or the only pay TV options at all, the FCC will probably take action. Moffett believes however, that th regulators will not nix another major AT&T deal, after it stopped the T-Mobile USA merger in 2011.
For an overview of the wheeling and dealing in the cable/telco industry, be sure to check out this article.