Here’s why YouTube is launching an official video game channel by John Gaudiosi @FortuneMagazine July 29, 2015, 10:51 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons Amazon-owned Twitch has gone largely unchallenged in the video game livestreaming market—until now. Google’s GOOG video division is launching YouTube Gaming, an app and website that will aggregate all video game videos, livestreams, and users in one place. “On an industry level, gaming video content is in growing demand,” says Joost van Dreunen, CEO of SuperData Research. According to van Dreunen, Gaming is the second largest channel on YouTube with 78 million subscribers, behind only Music, which has 89 million subscribers. Ryan Wyatt, global head of gaming content on YouTube, says the idea is for it to be a one-stop destination for games. Currently, gamers have to go to different places and search across YouTube to find videos, scripted narrative, animation, and livestreams about gaming and game culture. Wyatt says with the new YouTube Gaming, search algorithms have been optimized for gaming, which means game searches will no longer compete with other categories like sports or music. Wyatt admits livestreaming wasn’t a focal point of YouTube until now. In fact, before recent changes to its site over the last few months, a streamer had to have the technical savvy to jump through multiple hoops just to livestream. Now the process is seamless. But YouTube’s complicated livestreaming process opened the door for Twitch, which offered a plug-and-play alternative, to explode over the last few years, growing from 45 million monthly viewers and 90,000 broadcasters in 2013 to 100 million monthly viewers and 1.5 million broadcasters in 2014. “YouTube’s entry into the streaming market should put Twitch on notice,” says van Dreunen, who believes Twitch faces two major challenges—diversifying beyond its current audience, and hold on to its current audience with new competition from YouTube and startups like DingIt and Azubu. However, livestreaming is going to be a small piece of the gaming puzzle for YouTube Gaming, according to Wyatt. “Video on demand is going to drive this business,” Wyatt says. “But we want to give creators all the tools for their toolbox.” The new channel will also offer creators customizable business models to generate revenue from video content, including pre-roll, TrueView, non-skippable ads, and overlay ads. Wyatt says fans can also donate money to creators and YouTube is exploring a subscription model. “It’s long overdue that we build out an experience for gamers,” Wyatt says.