Amazon.com Inc. managed to dominate online book sales, then all of e-commerce and cloud computing. Now, the company has found a significant foothold in the next business it has targeted: Videogames.
in late September launched its first hit videogame, the appropriately titled “New World,” an explorer-themed Massively Multiplayer Online Game, or MMO, that takes place on a haunted island called Aeternum. In the first weekend of availability, the game brought in nearly a million players, and roughly the same number of spectators on Twitch — the live-streaming platform that Amazon also owns — which was the 12th highest viewership in Twitch history, Amazon said.
Like the rest of Big Tech, Amazon wants to own more pieces of the videogame market, the biggest entertainment category on a global basis even before a pandemic-influenced growth spurt in the past two years. Worldwide, videogames are expected to bring in $259.5 billion this year, up nearly 12% from a year ago, according to IDC analyst Lewis Ward.
In a recent fireside chat at the 2021 GeekWire Summit in Seattle, Amazon Chief Executive Andy Jassy said that videogames “could end up being the largest category in entertainment over a long period of time” and that justifies the company’s long-term investment.
Amazon established its “Games” division in 2012, but until “New World,” it was mostly known for swings-and-misses like a 2020 shooter game called “Crucible,” which was seen as a resounding flop. Christoph Hartmann, a former president of Take-Two Interactive Software Inc.
and founder of the company’s 2K Games label, was tasked with leading Amazon’s videogame ambitions in 2017, and recently spoke with MarketWatch about what he learned from “Crucible,” where Amazon’s gaming ambition goes from here, and why everyone is chasing Roblox Corp.
The ‘Crucible’ for a ‘New World’
In his interview with GeekWire, Jassy compared the videogame industry as very much like the movie industry in that it’s “hit driven” and that means being able to move on from failures.
“If you’re not willing to withstand the failures, including the spectacular failures, then you shouldn’t be in that business,” Jassy said.
Hartmann spoke in-depth with MarketWatch about Amazon’s biggest videogame failure, “Crucible,” and the lessons from that game that informed development and decisions surrounding “New World.”
“Don’t ship a game too early, and don’t ship a game when you have a larger-than-life competitor at the peak of its success, which would be [Epic Games Inc.’s] ‘Fortnite’ at that time,” Hartmann told MarketWatch of the lessons learned. “We’re doing a similar game trying to get a slice of the market, but it’s really the winner takes it all.”
“We applied all those learnings on ‘New World’ to really give it the time, we had so many delays,” Hartmann said. Unlike “Crucible,” “New World” is an MMO, more akin to Activision Blizzard Inc.’s
“World of Warcraft” franchise. “We went into a genre which hadn’t seen a big game in a long, long time, so that definitely helped us,” he said.
Shipping a game too early has been a big concern lately for the industry, given last year’s buggy release of the long-awaited and overdue “Cyberpunk 2077” from CD Projekt SA
that forced distributors like Sony Group Corp.
to offer full refunds. In this past year, Electronic Arts Inc.
has delayed the release of “Battlefield 2042” and Take-Two said expansions of the “Grand Theft Auto” franchise and two “immersive core titles” would be delayed.
Amazon can afford to think long-term
Even though Amazon is a relative newcomer in the games space, Hartmann said it has a distinct advantage over traditional videogame publishers: Since games are not the sole source of income, that allows developers much more creative freedom.
“Traditional publishers, due to being all publicly traded, you think kind of in quarters and fiscal years,” Hartmann told MarketWatch. “Amazon, when they build a new business, especially one like ours where every product takes you multiple years, they think more long term.”
That room to focus on creativity, rather than on how development was affecting a company’s bottom line, was one of the main reasons Hartmann joined Amazon, he said.
“We have an enormous amount of creative freedom,” Hartmann told MarketWatch. “Eventually, we’ll get judged by the results, but won’t have someone poking and micromanaging along the way.”
“‘New World’ is a great example,” he said. “In a traditional publisher, someone would have put their foot down and said ‘you’re shipping it because it’s in the fiscal plan’.”
Everyone chasing Roblox
One of the biggest changes in videogames over the past decade has been their ability to become social platforms built in virtual worlds. The social aspect of gaming has moved far past visiting friends’ farms in Zynga Inc.’s
“Farmville,” a change that was accelerated by the COVID-19 pandemic, when millions socialized via videogame platforms because they couldn’t in real life.
In the shift to videogames-as-a-social medium, Hartmann gave a big shout out to a company that just went public earlier this year, Roblox, where many young users who grew up with coding as a second language create their own games and content in virtual worlds.
“Everyone will be chasing Roblox, which I personally think is a tough one because, going back to my story about ‘the winner takes it all,’ I think they put out something so fantastic, it’s very hard to ever catch up,” Hartmann said.
“User-generated content will keep on growing,” he said. “It will be a standard in every game.”
Nurture first, acquire later?
As for what the next big disruptive trend in videogames is, Hartmann isn’t going to speculate, saying if he knew that he would “already be working on it.” Many disruptive trends in videogames have come as a surprise, Hartmann said, and that the next big thing will likely come from some small player out there.
That could explain Amazon’s stance on partnering with outside studios with a program called “Project Ignite,” which, Hartmann said, is “where we try to find those smaller, disruptive developers.” To date, Amazon Games has not acquired any other studios, unlike Netflix Inc.
which is just getting started in videogames.
One of the developers recently added to Project Ignite is U.K.-based Glowmade, which is developing an “original game” with Amazon. And in 2022, Amazon expects to release the MMO game “Lost Ark,” that was developed by South Korea-based Smilegate.
“They have to stay independent,” Hartmann said. “I think if a big player like Amazon or any other larger-than-life company comes in, you’re actually in the way of creativity.”
“That said, obviously, if one breaks through and turns into something really big, we will have conversations,” he said.