Amazon’s Video Game business

In 2012 Amazon made their own video game studio to try to enter this market

1. To head the studio, should Amazon hire an Amazon lifer, or hire someone with experience in the gaming industry?

2. Should Amazon hire a new young development team or headhunt talent from famous game studios?

3. Should Amazon build their own game making tools or use popular industry tools?

4. Should Amazon build games by looking at data or by just trying to develop a fun game?

5. Frazzini tried to make games similar to the most popular games at the time. Was this a good idea?

6. To showcase Amazon’s web services power, they wanted to release groundbreaking games that 1000 players could play together. Is this a good idea?

7. Should Amazon give employee bonuses (Amazon stock) based on length of time at the company or based on commercial or critical success of their games?

Answers:

1. Amazon hired Mike Frazzini who is close to Bezos but has no experience in the gaming industry. He came up in their book division, then was in charge of the division that sold games by mail

2. Amazon hired famous and successful game makers from other studios. They often paid double their previous salaries.

3. Amazon tried to develop their own game making tools to save money, but their tools rarely worked well

4. Amazon tried to use lots of data to make decisions. It analyzed recently popular games.

5. No because Amazon’s games weren’t original and seemed like cheap copies of the hit games. Their first 4 big titles were cancelled or failures

6. It was difficult for developers to come up with concepts that fit these goals.

7. Amazon rewarded employees based on length of time so people just focused on protecting their jobs. If projects get delayed, they are happy.

Results:

• Amazon spends $500 million a year operating the game division

• Frazzini set high goals saying: “Every game should make $1 billion” but understaffed all the projects

• The first 4 big games released all failed

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Amazon paid $1 billion for Twitch in 2014, a popular live video streaming website. Was this a good idea?

Google was their rival and also tried to buy it.

How does Twitch make money?

• Advertisements (like youtube) and subscriptions.

• Twitch has a currency called "Bits" which viewers buy to pay to cheer for streamers

Now the company is thought to be worth $3.7 billion in 2020. 15 million viewers tune into Twitch each day to watch, host, and cheer on live streams.

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Q: Frazzini wanted to build a digital game store (like Steam, the market leader) to avoid paying the 30% charge to them. Was this a good idea?

His team said not selling your game on Steam is like not selling your book on Amazon.

Their next (big budget) game is called “New World”

It’s about soldiers who colonize a mythical land (like Colombus did)

Q: Do you think this will be a hit?

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New World

Some people complained that the game was racist to Native Americans. Managers disagreed but then later had to change the game which delayed the release by 10 months.

Sources:

• https://www.bloomberg.com/news/features/2021-01-29/amazon-game-studios-struggles-to-find-a-hit?sref=P6Q0mxvj

• https://www.investopedia.com/investing/how-does-twitch-amazons-video-game-streaming-platform-make-money/

• https://www.ign.com/articles/amazon-game-studios-report-details-struggles-bro-culture-mismanagement-and-cancelled-projects