One company that is hiring aggressively in video games in the United States? Sony? No. Microsoft? No. Nintendo? No. Amazon? Yes.
So what is the strategy? Ponder why Amazon would be investing in video gaming? It may not be obvious unless, of course, you own a Kindle Fire. You get it already.
Think 12-to-24 months out, when there could be five viable social gaming platforms, including Apple, Facebook, Microsoft, Google, and …Amazon. And yes, this is a new generation of gaming. And, no, this is not at the exclusion of Nintendo, Sony, and Microsoft (Xbox 360–more on them later). This discussion focuses around social gaming, not traditional disc-based console gaming.
To be clear, social gaming is a nice, new, pleasant, less-demographically-landlocked-name for gaming beyond video gaming (see our piece called “Why is Zynga’s business model interesting?”, http://bit.ly/t1x4r6). ”Video gamers,” by-and-large, are supposed to be 12-to-25 year-old male shut-ins who have never played sports well. We concede that is a broad, sweeping generalization, but for the sake of this discussion, video gamers are a subset of “social gamers,” who are a much broader 13-to-60 year old male and female population. In other words, pretty much everyone or anyone.
Much of the discussion or “noise” today is about Zynga, who recently went public, or Facebook, who has an IPO coming up. Hence, the discussion of social gaming has been fairly deep under the radar. The reality, to us, is:
1. Social gaming has an initial launchpad on Facebook
2. Others are getting into social gaming, as more connected platforms are launched, such as phones or tablets
3. Amazon is quietly lurking, and gaining strength. And, they’re hiring.
1. Social gaming has its initial launchpad on Facebook. We’ll skip the specifics of hard numbers that are going up daily, but Facebook has such large numbers, and they’re pretty astounding. Further, they’ve partnered early on with a company that was willing to pretty much dedicate itself (at least early on) to serving the Facebook mass audiences in Zynga. While there are plenty of examples of social gaming already developed in the Asian markets, it is still early on in North America.
2. Others are getting into social gaming. The idea of social gaming is simple: growing reach via platforms and growing demographic as “gamers” age. The premise is a play on generational, secular themes: four generations of movie theatre attendees, but now two+ and soon three+ generations of “social gamers” who have played a free-to-play or paid-for “app.”
So which companies are chasing these masses? Easy. Everyone.
- Apple: Meet the app store. While their focus has been on free downloads (as trials), paid downloads, in the longer term, the free-to-play model (think free download, then buy “stuff” in-game with real money) continues to be pretty interesting
- Google: Android simply rolls along. On the phone front, Android will continue to gain ground, and much like the phone OS market share battles of a decade ago (where, for example, Nokia ruled the roost in much of Europe), Android has a chance to become a dominant player in the smart OS market, especially in Asia, in our opinion.
- Microsoft. They have greatly improved their UI experience in mobile and the TV, and are making progress in voice-based commands (see our piece “The New Xbox Live UI: implications…” http://bit.ly/t01Daa). The apps store will get louder in 2012. Their biggest challenge now is competition, not feature set: Microsoft is staring at more new first-or-second-time buyers choosing Apple and the iPhone over a Windows-based device. This trend leads to Macbook purchases, too, over Windows-based laptops, with Gen M.
- Research in Motion. Yes, we included them in this discussion but four years ago, one battle was “Can RIM penetrate the consumer before Apple penetrates the enterprise?” It is clear who won that battle (thanks, 20-20 hindsight!). What happens next to RIM? Yikes. Unclear to us where the company is going, even with new management. Nonetheless, a likely acquisition target by a company that wants to play in mobile and has cash on the balance sheet (Facebook, Amazon, someone completely new to the space?).
- Facebook. Yes, they’re going public, and yes, they’ll have cash. While they like being an app supplier to many of current smart OS and hardware providers, this doesn’t preclude them from wanting to seed the market for their own smart OS phone to leverage/expand the tremendous FB ad network beyond desktop/tablet/laptop/current mobile.
- Amazon. An Amazon phone? Who knew we’d see an e-reader, then the Kindle Fire, then the…? Don’t discount it, or a TV, while we’re at it. (But an Amazon TV discussion is a separate research piece.)
3. Amazon is quietly lurking, and gaining strength. And they’re hiring. This one is fairly simple. They’ve launched their Kindle Fire, which could be in an interesting position. Posit for a minute that the social gaming battle will mirror the console business and its cycle wars. Sony leads, then Nintendo, then Microsoft, then….
What are we seeing today on the tablet front? Apple leads, then…the Kindle Fire, and then in distant third, the Nook (and noise from Sony). There is plenty of money to be made being number two or number three in a hardware war, and that, to us, is what Amazon is targeting. There is plenty of room, especially at a cheaper price point, for the Fire. The anecdotal stories about Kindle Fire purchases from Holiday 2011 abound if you listen closely enough.
If you accept that console wars are translating to tablet wars, and Amazon could be happy being a #2 player today, then, let’s now examine the current open job requirements on www.Amazon.com.
If you type in “video games” into the careers web page, 51 openings pop up. Yes, several are related to the sales of packaged goods software through the web site, however, let’s look at three of those openings.
1. Software Development Engineer, Digital Video Games
2. Senior Vendor Manager, Digital Video Games
3. Director, Next Generation Appstore
This math, in our opinion, adds up to more investment in video game, or social gaming development, with the target on the Kindle Fire, and the next gen beyond it. And, to be clear, this doesn’t preclude game development from being limited to distribution the Fire or Fire 2 (whatever they call it). (That said, what comes after a Fire? The Inferno?)
If you are a video game or social game developer today, in our opinion, the first blush is to choose Facebook or Apple, or maybe Android. Our point? Amazon may be in a nice position, especially if you consider that neither Facebook, nor Microsoft, nor Android (to a lesser degree) have a significant tablet and/or a phone. Hence, an Amazon phone is a possibility (and TV).
Two other thoughts: 1. Xbox 360–a social gaming platform? The Xbox 360, and more so, the Xbox 720 (or whatever it’s called) will likely extend Microsoft’s reach into the living room and the TV. The revamped UI, as we’ve noted recently, is hugely improved over previous iterations, and has been extended into Windows 8 and for mobile. The app store (Metro) is scheduled for a beta launch in February, 2012, and in our opinion, will garner more attention as a potential competitor to the iTunes store.
2. Healthy reminder: there’s plenty of room for being #2. There are many historical examples where there is a market share leader, and a significant number two company, and typically, at least, a third. For example, the smart phone operating system battle is already shaking some companies out, such as Palm. Will there be five social gaming platforms over time? History says no, but that shakeout is a few years out in our opinion.