Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now


Amazon’s Long Game: What Could Its Streaming Service Look Like?

AWS, Twitch, scope: Amazon brings a lot to the table

Change is coming to the video game industry, and it’s opening the door for companies that, just a few years ago, were outsiders.

Google unveiled Stadia last week — a subscription game-streaming service that will enable consumers to games on their device of choice without requiring a console — putting the company head-to-head with longtime players like Sony, Microsoft and Nintendo. And earlier this year, reports surfaced that Amazon would be joining the fray soon.

Amazon hasn’t commented on the rumors, but if they’re true, it could be a seismic disruption for game makers and players.

Watch: Google Unveils Stadia 

The catalyst for these changes is a looming technology shift, where video games are streamed directly to people’s streams, much like video programming on Netflix and Hulu or music on Spotify. Gamers who want to play the latest games won’t have to shell out $400 for a console system. And they won’t have to update their graphic cards.

It’s a transition that opens gaming up to an exponentially larger audience.

“A lot of people who wouldn’t want to put down [money] for a console will now be interested in playing games they didn’t play before,” said Mike Hickey, an analyst with The Benchmark Company. “A lot of people don’t want to buy a Nintendo Switch, but if the games were available on, say, a smart TV, that would make it real easy to try. I think you’d see a lot of new players. … Behaviors are already set for most consumers when it comes to streaming media, whether its movies or music or TV. To layer something on the game side is sort of a no-brainer.”

See also: Selling Through Amazon: What Retailers Need To Know

The idea of game streaming is nothing new, but it has always been hamstrung by slow Internet speeds. Games require split-second reactions and any lag in a stream could make the experience a frustrating, rather than fun, one. But upgrades in streaming technology and faster broadband speeds have made it a reality. Sony currently offers PlayStation Now, giving players instant access to a library of 650 games (mostly older, catalog titles) for $99 per year. Google ran a successful test of a service called Project Stream last year, partnering with Ubisoft to stream “Assassin’s Creed: Odyssey.” Microsoft, Verizon and Electronic Arts also have services under development.

Amazon, though, has a few advantages that could move it to the top of the pile. Chief among those is its scope. Amazon can do something that few other companies can do (Google and perhaps Apple being the others): It can play the long game.

“There are still a lot of business model challenges with streaming and someone is going to have to take a loss-leader position,” said David Cole of DFC Intelligence. “That’s where you look at companies like Amazon and Google. They have that capability. … Amazon’s economic ability is probably one of their biggest advantages.”

See also: Should You Use A Consultant When Selling Through Amazon?

Of course, Amazon has some technical advantages, too, such as Amazon Web Services. Cloud computing is a key component of game streaming, and AWS is one of the leading providers on the market, already providing the backbone for companies from Airbnb to Zillow. Most critically, perhaps, is one of its earliest customers: Netflix.

The demands from that streaming service gave Amazon good insight into how to handle the bandwidth demands of a major streaming service, something other new entrants in the field are still working out.

Amazon also has a pre-existing relationship with a big segment of the gaming population. Every day, close to half a million streamers go live on Twitch, the Amazon-owned live-streaming service, to broadcast themselves playing games or watch others. It has 15 million unique daily visitors and last year, those visitors spent more than 434 billion minutes watching the service.

See also: AmazonBasics: Peeling Back Amazon’s Private Labels

“If you’re watching a game on Twitch, you ‘re probably one click from streaming that game if you do it right,” said Hickey. “So Twitch is sort of an interesting natural window for players to enter. You view and then you play.”

Finally, there’s Amazon Prime. What started out as an annual premium for expedited shipping has morphed into a streaming video service, a source of free books and magazines, an unlimited Cloud photo storage vault and a fashion advisor. It’s not unthinkable that the company would add free game streaming on top of that.

“Amazon Prime is a key differentiator,” said Cole. 

See also: Warren Outlines Plan To Cut Amazon, Google, Facebook Down To Size

Should the company fold game streaming into Prime, said analysts, it will probably follow a model that’s very similar to Prime Video: a robust collection of back catalog titles, mixed with some originals. But if you want to play the newest game, that will cost extra.

Imagine, for instance, streaming 2013’s “Assassin’s Creed: Black Flag,” and being captivated by the series. To be able to begin playing “Assassin’s Creed: Odyssey,” the most recent game in the franchise, in a single click is an enticing incentive.

The entry of tech giants like Amazon to the gaming space could lead to a new round of buyouts and consolidation, as well, note analysts. While large legacy companies like Sony, Nintendo and Microsoft are unlikely to be targeted, developers and publishers could see some interest as businesses that are new to the industry look to offer certain games and franchises exclusively.

See also: Using eSports To Transform the Retail Experience: Now On Demand

Perhaps sensing this, Microsoft has already been on a shopping spree, buying six studios last year alone. (The maker of the Xbox has its own major Cloud presence and could be set to thrive as streaming becomes widespread.)

Big tech companies have always been a looming threat to leaders in the video game space. But, until recently, the focus has been on Google and Apple.

Those two might present a substantial challenge as game streaming becomes the preferred method of distribution, but the threat from Amazon is arguably bigger. With a built-in army of people who view it as the go-to retailer, existing deep ties in the gaming world and enough cash on hand to weather the turbulent early years as players adjust their habits, the company could become the most dominant in gaming. And it could happen quicker than many people expect.

“Amazon has been looking at the game space for many years now,” said Cole. “They’ve built up a presence in the retail space. They do digital sales. They have the Twitch audience. All of these combined together make them a pretty fierce potential competitor.”