Twitch is a video service that lets XBox or Playstation 4 gamers live-stream their gameplay to thousands of viewers simultaneously, and if the acquisition happens, it would be the largest in YouTube's history.
Variety also reports that YouTube is preparing for U.S. regulators to take a hard look at the potential acquisition to make sure that it doesn't raise anti-competitive issues in the online video market.
The three-year-old startup claims to have more than 45 million monthly users, and it has more peak internet traffic than Facebook or Hulu. Since becoming one of the first sites to host user-generated, live-streamed video, it has raised $35 million in funding.