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Video steaming company, YouTube is reportedly having its eyes on Twitch, a video game streaming company as a potential acquisition.

Sources familiar with the acquisition deal told Variety that YouTube, which is a subsidiary of Google is set to buy Twitch for $1 billion, in what might be an "all-cash" purchase. The announcement of the deal is "imminent." Both the companies have refused to comment on the supposed deal.

Twitch has gained popularity with gamers, where they are able to freely upload, watch and stream gaming videos from Xbox and PlayStation consoles. Twitch has more than 45 million visitors per month and is based in San Francisco. It was officially released in public beta in June 2011.

The website gained popularity when the company launched Twitch Plays Pokemon as social experiment with more than 80,000 viewers on February 2014. Users were able to type in commands via chat rooms and play the game. When the experiment came to a close, more than 1.16 million people had participated in it.

It was also reported that the U.S. regulators are likely to challenge YouTube buying out Twitch as it raises questions on ant competitiveness in the online video market. YouTube has more than 1 billion users around the world.

Twitch originally launched as where people hosted livestreams of user-generated videos. It was co-founded by Justin Kan and Emmett Shear, of which Shear is now the company's CEO. This was a start-up that received funding of $35 million.

There have been numerous other companies like Microsoft that have made their approaches to Twitch, but it was deemed better to go with Google's YouTube as it would "help the company become what it wants to be — the definitive platform for watching and streaming live video gaming," reported The Verge.

Twitch is known to push in more traffic during the peak hours when compared to the likes of Facebook and Amazon.

This deal is being compared with Facebook acquiring Instagram for $1 billion in 2012, where a giant company bought a fast-growing company that was seen as a potential competitive threat.