Destructoid Checkpoint: The Amazon Equation

It has been a tough year in gaming, with regular layoff news seemingly contradicted by the fact that, if you ask the average gamer on the street, it’s actually been a pretty good year of game releases. Amazon is the most recent member of the Big Tech club to lay off people, with a confirmed 14,000 employees to be impacted, including in the company's struggling gaming divisions. 

The knock-on effect of this is that MMO New World has gone into maintenance mode, and the Lord of the Rings MMO has been canceled. What makes this all the sadder is that, before they started to put their eggs in the wrong basket and succumb to the distractions of multiplayer, Amazon Games Studios was planning to focus on exactly the kind of games that have been breaking out this year.

I spoke last week about how, for Microsoft, the $65 billion loan from the rest of the business is now a loadstone around the neck of the Xbox division. That is why they are feeling the heat, dramatically trying to change their business. For Amazon, these layoffs stem from a very different problem.

You can’t do everything

When Jeff Bezos packaged his first book and sent it off to his first customer, he wasn’t doing so out of a love for literature or the fine art of printing; he wanted to make money. The concept of selling books was attractive because he could easily compete with brick-and-mortar shops, which were inventory-limited, and he could be, in a way, closer to potential customers than just about any other bookshop on the planet. 

Purchasing things online was still pretty novel in 1995 when the Amazon website launched, and a lack of online competition allowed Bezos to be first, which is maybe the most important thing in the world when it comes to launching any business. Since then, Amazon has done a solid job pivoting into different areas ripe for growth, but nearly always came with the added benefit that they could be built onto the company’s existing infrastructure.

Building a massive online store allowed them to pivot to making those same systems available to third parties. First-party sales were the biggest part of Amazon's business last year, with nearly 39% of its total revenue. Third-party seller services were next, at another 25%. 

In third place comes Amazon Web Services, with 17% of the revenue, totaling $107.76 billion. Yup, it’s an extraordinary amount of money, and they have been making it for years, so you can understand why someone, somewhere in the Amazon structure, felt that a move into producing games made sense. They had the infrastructure. They specialized in providing costly services to gaming companies, so if they just made the games themselves, the cost of those services being considerably lessened would lead to pure profit. 

If I’m an MBA, my eyes are rolling around my head in sheer ecstasy at the logic of it all. Just make games! It’s so simple! 

Amazon Game Studios started out with a smart enough plan. Small teams, focusing on creative projects. They brought in Kim Swift, known for working on Portal and Left 4 Dead, along with Clint Hocking, known for Far Cry 2. Studio Vice President Mike Frazzini wanted to make projects that were small and interesting, but with a reasonable chance of becoming breakout hits.

That would die out pretty quickly, and two years after being set up, things quickly started to go wrong. Three games were announced for PC in the form of a multiplayer arena sports brawler, Breakaway, a class-based combat game that seemed to be going down the same ill-fated route as other attempts to make MOBAs into third-person shooters called Crucible, and New World. The first two would be canceled before ever being released, while New World got some hype on launch, but stumbled soon after, and only recently seemed to find its feet after a few years. That, it appears, was too late.

None of them were small projects; all of them were reliant on AWS infrastructure to support their multiplayer focus, and it instantly became clear that Amazon Game Studios was focusing on games that could take advantage of the strength of Amazon, rather than attempt to bring something to market that was driven by creativity, passion, and inspiration. The limits for those three things had been carefully set. 

Make the game you want to make, just make sure it ticks these boxes.

“Everything Companies” are destined to fail

The concept of the Everything Company is something of a misnomer. Plenty of huge companies own multiple divisions, smaller companies, subsidiaries, and brands, but generally speaking, they are all in adjacent niches. Mars owns many companies, but they are all in the confectionery industry. P&G likely owns every item that makes it into your bathroom. 

Generally speaking, industry knowledge is leveraged to benefit all of them, likely through beneficial, volume-based deals with distributors and retailers. 

I’d argue that Amazon simply bit off more than it could chew by attempting to be the retailer, the web services provider, the publisher, and the developer at the same time. The proper experience was not developed before the expansion occurred. And I don’t mean the individual experience of the developers or studio heads, but the shared, institutional experience of the company as it developed over time. It was never really allowed to have these necessary years before being saddled with the expectation that it would leverage the rest of the business. 

Amazon has failed before, usually by trying to crack a niche that there just wasn’t much room in. Pets.com, the Fire Phone, Amazon Auction, Amazon Destinations, BuyVIP. The sad reality is that many of the games really taking off right now are the sort Amazon Game Studios was planning under Frazzini’s vision. Small, experimental, and creatively brave. 

It hurts to see developers and studios going through more layoffs, but Amazon still has the chance to refocus on something that can genuinely matter and make a profit in the long term, something that they had their eye on already. Refocusing on smaller projects with safer budgets, but that are not beholden to tying into the rest of the best, might just provide Amazon Game Studios with a more interesting future than trying to find the next big game from Korea or Japan to publish in the West.