Updated 6/2/2014: Google’s acquisition of Twitch is not confirmed. We’ve clarified the post.
Yahoo has got to be regretting Google’s acquisition of streaming-media sensation Twitch TV.
Little more than a week after Google was rumored to be buying Twitch for $1 billion, rumors leaked out that Yahoo is planning to launch its own competitor to YouTube this summer.
Google doesn’t have much to worry about. YouTube is far and away the biggest purveyor of video online, showing 6 billion hours of video to more than 1 billion people each month. Building an effective competitor to YouTube is going to take a long time, an enormous amount of marketing, and a lot of luck — even if you are the biggest media site in the U.S.
Twitch, for its part, is the single biggest provider of streaming video showing people playing (and talking about) video games. You might not think that’s a very interesting market, but Twitch reaches 45 million people every month. When Twitch live-streamed VentureBeat’s GamesBeat conference last year, it reached over 1 million viewers over the course of two days. Yahoo certainly could have used Twitch’s reach, its video content, and its young, willing-to-spend-money demographic.
(Disclosure: our videogame site, GamesBeat, has a partnership with Yahoo that drives some traffic to our site.)
Yahoo knows it needs more content. Despite all its talk of being a tech company, Yahoo thrives on the strength of its media: sports, news, weather, finance, and the like. Yahoo head of mobile Adam Cahan referred, in a recent VentureBeat interview, to the company’s mission to “inspire and entertain” consumers. In effect, it’s a next-generation media company and has been for a long time.
That’s why Yahoo recently beefed up its news operation, hiring Katie Couric and David Pogue, both expensive, name-brand news celebrities. It’s building out its news operation with seasoned professionals and producing more original content of its own.
More video would be the next logical step. A YouTube-like platform that allows millions of people and hundreds of thousands of companies to upload everything from cat videos to highly-produced serials, would be one way Yahoo could build out its content library. As Google has done, it could groom the best producers and turn them into paid channels, sharing a small percentage of its advertising revenues with the cream of the crop as a way of encouraging everyone to hit a high bar.
Yahoo probably also needs to follow in the footsteps of streaming-video services like Netflix and Hulu, and start commissioning its own original shows. There’s a lot of expense involved in producing a high-quality hit like House of Cards or Arrested Development, but it pays off enormously with mind share, if not revenues.
But is Yahoo really doing what it needs to do in order to become a serious contender in media? Its shopping spree last year — acquiring 22 companies, more than any other tech company — doesn’t reveal a clear pattern, other than a desire to catch up with its competitors in mobile tech. (And maybe in hiring top-flight engineers — many of Yahoo’s acquisitions are clearly acqui-hires, after all.)
The biggest 2013 acquisition was its $1.1 billion buy of Tumblr, a wild, mostly user-generated mix of content running the gamut from porn rebloggers to slick marketing sites. Of all Yahoo’s properties, that’s the one that’s most comparable to YouTube in terms of where its content comes from (mostly ordinary, low-quality user contributions). Could Yahoo build a video-sharing site on top of Tumblr? That would be smart.
“There are obvious candidates for reinvention,” Cahan said in an earlier interview with VentureBeat. “There’s communications, there’s search, there’s video, there’s the digital magazines. We want those powered by Flickr and Tumblr.”
There’s no doubt that owning media — movies or music that people actually want to watch — is increasingly important to tech companies. (The streaming media business might be part of the reason Apple is paying $3 billion for Beats Electronics.)
The question is, how far is Yahoo willing to go in order to build up quality content? So far, we’ve only see the first few, tentative steps.