This seems like a misstep to me. Amazon is a conduit for content to be bought and sold - it shouldn't create content itself. Now, a game platform I could totally understand.
The problem with selling other stuff is that you can never corner the market with it alone.
As the Kindle book store has taken over, publishers have started actively resisting the store - giving better deals to competing stores, or even leaving the "Amazon network" entirely out of protest. A content distribution network is self-limiting since content producers are scared to death of being stuck with a single de facto monopoly distributor.
Hence why the studios tried to kill Netflix, and damn near succeeded.
If you want to have any hope of becoming the dominating, go-to distributor for all media of a particular sort, you'd have to drag a lot of producers in kicking and screaming - this means absorbing said creators into your fold, and also "incentivizing" dissidents by having so much grade-A content on your network that it cannot be ignored (see: Hollywood's relationship with multiplexes).
This move makes a lot of sense if you consider also that Amazon has tried to open their own movie studio also - they're clearly trying to create AAA-level media as a way to bootstrap their distribution network off the ground and make it harder to ignore/protest against.
Apple has already made huge inroads to content production already by starting their book publishing house. For better or worse, this is a logical extension of that strategy.
I don't think I'd view book publishing as content production - a better analogy would be if they had writers on staff, writing the books, which they don't, as far as I'm aware.
I never got this attitude. "They are expanding beyond their core base, they shouldn't do that!" Why, exactly, this is the case mystifies me. A) Amazon is a better judge than anyone on what they can or cannot do, let alone should and shouldn't. B) Diversification is simply good business. C) Amazon is not expanding into drastically new markets. If anything, their initial jump into selling software (AWS) was a riskier proposition because it was unlike anything Amazon had done before, and a relatively untried business.
Finally: People scoffed at the iPod and iPhone when they came out; it wasn't Apple's business to go into consumer electronics or even telecoms. The Michelin Tires company produces the most widely respected restaurant guide. Clearly, someone should have put a stop to them - they shouldn't have done that.
Much like Bic is the maker for cheap, plastic tools (pens, razors, lighters), I don't see why Amazon can't continue to write software. There is virtually no risk and minimal investment.
Diversification is rarely good business, if it doesn't leverage some existing core competitive advantage. That's particularly true for public companies-- Amazon investors wanting some social game company exposure can easily buy some Zynga stock.
He said rarely. The fact that Amazon made it work is one of the notable business stories of the last decade, so if anything I think that reinforces his point.
That example is extremely unique and is more akin to selling a byproduct or runoff from some other production. AWS doesn't exist as an entirely new venture, it leverages everything Amazon has become good at over the years but never sold directly to the public.
This isn't really the same situation at all. Amazon knows nothing about game development, and now has to hire a bunch of new people experienced in game development and focus on getting it right. AWS was already there and a clear benefit to the business before the idea of selling it to users as a service was even on the table.
How about the whole Virgin empire then? Or Reliance industries or Berkshire Hathway ? Maybe Amazon is morphing into a giant holding company over time (industrial robots, cloud computing, ecommerce, ebooks, games, consumer hardware, video streaming, selling non branded commodity versions of electronics under their own brand (amazon basics sells things like hdmi cables, mice etc))
Those are conglomerates, which are quite controversial in the investing world. They're usually stable businesses, but often come with a "conglomerate discount" that leads to lower investor returns. This is due to increased overhead, murkier financials, and the simple fact that the management can't be as focused.
Thanks for pointing the discount out - I wasnt aware of it. http://www.google.com/finance?catid=59360336 does indeed confirm that over long periods of time conglomerates appear to perform poorly when compared to the S&P.
Amazon could abuse their position (as a big store) by telling makers of competing games, "We're sorry, but we rejected your application to sell your game in our store."
Fortunately, the US has laws against this sort of thing, but they can take years of legal hassle to enforce. Meanwhile, loads of competing game makers are shut out of a big store.
Amazon could diversify into plenty of other things where such conflicts of interest are avoided. (AWS is a good example. Nobody was selling a competing service via the Amazon store.)
You don't think they were already dipping their toes in these waters with their book publishing programs? What about Amazon Studios, which is funding film making?
While a change of direction, I don't think it's an abrupt one. Amazon has been slowly drifting toward creating their own content for a while now.
Their game studio has been in development for years (I interviewed with them when they were already on their way, close to two years ago), way before the Fire came out. But yeah, it seems like a bad decision not to at least port their games to their own system too.
At this point I would think we all expect something ground-breaking or at least exciting from Amazon with any announcement they make. An Amazon game studio with a launch game that consists of "social" picture hunts is definitely not what I expected when I visited the link. Disappointing.
I think Amazon's general strategy is to never surprise its customers. That's good for retail and low-end tech. Probably it's also good for cheap games. Where I think they'll have trouble is in more cutting edge type stuff but I don't see them entering into something like that any time soon.
Methinks this is some high-up executive's pet project. How else would Amazon decide to make a social game that doesn't run on Android, a platform they're quite invested in, or HTML5, and a moving-item game, no less?
Why is Amazon making social games, you ask? Good question! We know that many Amazon customers enjoy playing games – including free-to-play social games – and thanks to Amazon's know-how, we believe we can deliver a great, accessible gaming experience that gamers and our customers can play any time.
Translation: We need more ways to extract money from our customers. People throw bags of money at social game makers, so we'll do that too and add in a blurb about our experience so our customers will think we've really thought this through.
A different possible motivation for this just occurred to me: Maybe Amazon is getting tired of paying out affiliate fees, and is envisioning this as an in-house advertising channel?
Amazon is really building an advertising and tracking ecosystem with it's store, it's tablets(and maybe smartphones) and it's tracked browser, it's video service and it's groupon clone and now this social game.
Online direct advertising is great but: Online advertising haven't had much success in brand advertising. having control of a big advertising ecosystem together with complete knowledge of the consumer in store behavior lets you measure the long term connection between a highly targeted ad and in-store behavior later on. Basically solving online brand advertising.
Having such a huge advantage could be a powerful weapon for amazon against brick and mortar stores.
"Key components of games are goals, rules, challenge, and interaction."
If you can't loose, and hooking up random input to the game solves it after a while, how can you consider that challenge? Is it really enough to say "we have more content waiting for you, and challenge you to find it by either deliberately or randomly mashing buttons" -- ?
For example, Monkey Island is a great story, and I still adore it; but in the way I would remember and like a movie, not in the way I remember playing Speedball or Empire Deluxe as a kid.
Those enthusiasts you mentioned, do they keep playing these games over and over and over, like a Chess enthusiast would? Is there any measure by which one could say they improved, until they mastered it? I doubt both. So that they're nostalgic about something that they have long sucked dry, just reinforces my point about that not even being a game. I mean yes, skipping over the cracks in the sidewalk is also a game, but come on..
37 comments
[ 519 ms ] story [ 952 ms ] threadAs the Kindle book store has taken over, publishers have started actively resisting the store - giving better deals to competing stores, or even leaving the "Amazon network" entirely out of protest. A content distribution network is self-limiting since content producers are scared to death of being stuck with a single de facto monopoly distributor.
Hence why the studios tried to kill Netflix, and damn near succeeded.
If you want to have any hope of becoming the dominating, go-to distributor for all media of a particular sort, you'd have to drag a lot of producers in kicking and screaming - this means absorbing said creators into your fold, and also "incentivizing" dissidents by having so much grade-A content on your network that it cannot be ignored (see: Hollywood's relationship with multiplexes).
This move makes a lot of sense if you consider also that Amazon has tried to open their own movie studio also - they're clearly trying to create AAA-level media as a way to bootstrap their distribution network off the ground and make it harder to ignore/protest against.
Finally: People scoffed at the iPod and iPhone when they came out; it wasn't Apple's business to go into consumer electronics or even telecoms. The Michelin Tires company produces the most widely respected restaurant guide. Clearly, someone should have put a stop to them - they shouldn't have done that.
Much like Bic is the maker for cheap, plastic tools (pens, razors, lighters), I don't see why Amazon can't continue to write software. There is virtually no risk and minimal investment.
This isn't really the same situation at all. Amazon knows nothing about game development, and now has to hire a bunch of new people experienced in game development and focus on getting it right. AWS was already there and a clear benefit to the business before the idea of selling it to users as a service was even on the table.
http://www.investopedia.com/terms/c/conglomeratediscount.asp
Fortunately, the US has laws against this sort of thing, but they can take years of legal hassle to enforce. Meanwhile, loads of competing game makers are shut out of a big store.
Amazon could diversify into plenty of other things where such conflicts of interest are avoided. (AWS is a good example. Nobody was selling a competing service via the Amazon store.)
While a change of direction, I don't think it's an abrupt one. Amazon has been slowly drifting toward creating their own content for a while now.
[1] http://www.amazon.com/Best-Sellers-Appstore-Android-Game-App...
Translation: We need more ways to extract money from our customers. People throw bags of money at social game makers, so we'll do that too and add in a blurb about our experience so our customers will think we've really thought this through.
There is money in social games (as far as the PHB can see from zynga). Amazon has an amazing cloud platform that these games can execute from.
I totally understand the move.
Amazon is really building an advertising and tracking ecosystem with it's store, it's tablets(and maybe smartphones) and it's tracked browser, it's video service and it's groupon clone and now this social game.
Online direct advertising is great but: Online advertising haven't had much success in brand advertising. having control of a big advertising ecosystem together with complete knowledge of the consumer in store behavior lets you measure the long term connection between a highly targeted ad and in-store behavior later on. Basically solving online brand advertising.
Having such a huge advantage could be a powerful weapon for amazon against brick and mortar stores.
also, "social"? either it's multiplayer or it's not.
Quoth Wikipedia:
"Key components of games are goals, rules, challenge, and interaction."
If you can't loose, and hooking up random input to the game solves it after a while, how can you consider that challenge? Is it really enough to say "we have more content waiting for you, and challenge you to find it by either deliberately or randomly mashing buttons" -- ?
For example, Monkey Island is a great story, and I still adore it; but in the way I would remember and like a movie, not in the way I remember playing Speedball or Empire Deluxe as a kid.
Those enthusiasts you mentioned, do they keep playing these games over and over and over, like a Chess enthusiast would? Is there any measure by which one could say they improved, until they mastered it? I doubt both. So that they're nostalgic about something that they have long sucked dry, just reinforces my point about that not even being a game. I mean yes, skipping over the cracks in the sidewalk is also a game, but come on..
http://www.geekwire.com/2011/amazons-bezos-innovation/