Amazon Game Studios – Game on finally!

Amazon Game Studios sees some traction at last.

• Amazon has had a torrid time with its fledgling game studio, but its recent release is seeing good traction with gamers but I still think that Amazon’s real aim here is to sell the tools to developers rather than make the games itself.
• After the cancellation of two of its big-budget games, Amazon has finally released New World, a massive multiplayer online game (MMO), and the world that it has created is putting up good numbers.
• The game has managed to break 750,000 concurrent users on Steam, with hundreds of thousands viewing the streams on Twitch.
• Although some of the early impressions from reviewers are mixed, they admit that there are players everywhere in this world running around exploring and fighting.
• This early momentum is very encouraging and if Amazon can keep the interest going it might finally have a hit on its hands.
• This is important for Amazon because it has been trying to make a hit game since 2014, and the success of New World is an indication that it has finally figured out how to do it.
• However, I still do not think that being a successful games studio is the long-term strategy.
• I think it makes more sense for Amazon to become the go-to place to develop games and it has spent the last few years assembling the assets that would allow it to do just that.
• The fact that it has now created a decent game in its own right implies that it has figured out what it takes to create a good game such that it can now offer a great service to game developers.
• This is similar to the reason why Apple would want to build a vehicle.
• Once it has learned what it takes to create a digital vehicle it is in a better position to ensure that its existing and future products are tailored to offer an optimal experience when used in a digital vehicle.
• Hence, assuming that the current momentum continues, I don’t expect this to be the beginning of a stream of games, but that New World will be used as an example of what one can create if you choose to create your game with Amazon tools and infrastructure
• This is much closer to what Amazon does with AWS and hence makes more business sense than becoming a fully-fledged game studio.
• Amazon has been trading sideways for months now which I think is a reflection of the fundamentals needing to catch up with the dizzying valuation that is slowly unwinding.
• As a result, the valuation of Amazon is below its peak, but it still looks expensive compared to almost any other business out there that sells things to consumers for a living.
• I think it could go sideways at best for some time longer.