Amazon is to develop its own computer games, pitting the retail giant head to head against the likes of Nintendo and Electronic Arts.
The Seattle business, which is expected to launch its first games console this year, has already dipped a toe into the project, with a game called Air Patriots and the acquisition of a Californian gaming company, Double Helix.
It is now on a hiring spree to recruit industry heavyweights in Seattle and Silicon Valley, as part of plans to turn its fledgling Amazon Games Studios into a major operation.
It is understood that Amazon will use the original content as “bait”, to encourage customers to buy its new console, and then purchase all their games through the device, from Amazon. The company has already had considerable success with the same strategy in other sectors, where it has used a virtuous circle to exert an iron grip on that sector.
The most obvious example is in ebooks, where the company launched its Kindle ereader ahead of competitors, linked the ground-breaking device directly to the Amazon store, and then started its own book publishing division to seed it with original content.
More recently, the retailer has started to produce its own television programmes, much like Netflix has, in order to hook consumers into its online rental business. By doing so, Amazon not only bolsters its revenues, but it also ensures that the company captures as much data as possible about users’ habits, helping to make the entire business as sophisticated as possible.
However, the development is bound to upset competitors such as Nintendo, Electronic Arts, Sony and Microsoft, which have invested billions of dollars into their own gaming systems, including consoles and original games.
Double Helix, the company Amazon acquired last month, has a strong track record of producing games for these players – notably Killer Instinct, which became a runaway bestseller for Microsoft’s Xbox.
Amazon is entering the fray at a time when these companies are already under growing pressure from a shift in user habits, as customers swap their conventional games consoles for games they can play on their mobile phones.
In January, Nintendo – which was founded in the 1880s as a playing-card maker – issued a profit warning after sales of its Wii console fell even more sharply than expected.
Amazon is expected to launch mobile games as well as console games, in order to tap into what is one the most rapidly growing parts of the gaming industry.
Analysts expect the entire gaming market to be worth $83bn (£50bn) by 2016, more than half of which will come from advertising-funded games played on tablets and smartphones.
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