Amazon.com wants to rule the video game universe. And guess what? It will, possibly even sooner than anyone expects.
The company actually told me so a few weeks back when I spoke to two of many Amazonians charged with rebuilding their games business into the industry Gigantor. The message was, “We already do pretty well, but we wouldn’t do this if it was only going to be a several-hundred-million dollar business. We know there’s a multi-billion dollar opportunity for Amazon if we do this right.”
As an example, Amazon’s decisive move into the pre-owned (read: used) games business was one clear sign that the company isn’t messing around. And it’s obviously caught onto the fact that the boxed PC games business is all but ancient history. If you’ve browsed Amazon’s games section lately, you may have noticed a recent addition to its menu entitled “Game Downloads.” When clicked, you’re taken to a page that looks very much like every other Amazon page: The same straightforward, vanilla design that has evolved over time into undoubtedly the consumer-friendliest way to present and sell products to the mass market. Every successful online store from Wal-Mart to Overstock.com has mimicked that familiar style.
But for gamers who are used to spending time on services like Steam, Amazon’s gaming pages are uninspiring. The design just doesn’t welcome nor entice gamers to spend more than a few minutes clicking through its offerings, which are sadly lacking — for example, Hardy Boys and Backyard Sports are both offered as part of its ‘Core Games’ selection. To be honest, the majority of Amazon’s digitally distributed games cater to a casual or non-gaming crowd that is, as we speak, fleeing in droves to online casual games sites and away from boxed product. To be fair, until recently the word “beta” was stamped next to the title at the top of the page, showing Amazon also realizes this is not a commercially viable digital distribution offering, but rather a test run of something bigger to come.
Amazon obviously sees the writing on the wall with regard to PC boxed product. And with the rise of Internet-connected TVs and console makers bundling it’s most likely looking ahead to the time when console product is primarily distributed digitally as well. And while the obituary for GameStop and retail boxed game product might not be written for a few years yet, the focused, determined entry of Amazon into the mix might hasten that day significantly. While Amazon’s current digital distribution service might only be just post-beta, with the resources the company has at its disposal it shouldn’t take long to see a stocked-to-the-gills digital download site. But that’s just the first step for Amazon to become the dominant player – across all genres and platforms – in the industry.
Go For The Core
Without knowing the real numbers, Steam’s overwhelming market share leadership in PC games distribution is undisputed. If anyone is going to compete with Steam, it’s going to be Amazon. But the online vendor needs to work harder. GameStop and other retailers are retooling and going after the PC and digital distribution market in other ways, such as selling game cards for DLC, but their ability to compete at the level of Amazon is virtually nil.
Amazon, though, needs to embrace the concept of stealing. Don’t try and reinvent the wheel Steam has nearly perfected. Instead, take a long look at the comments that come back from their diehard users and focus on making the Amazon digital distribution experience as painless as possible. Do what Amazon does best: You listen to your customers and make changes quickly that address their problems and concerns. So build a site that addresses Steam’s customers’ problems and concerns.
And then build another one that’s non-core gamer friendly. They’ve already gotten a good start with their current offering. Don’t do away with it, just separate it out a bit. Keep it friendly and inviting while making the core games section edgy and inviting. There are two very different customers to appeal to. Keeping them separate and happy is going to pay back dividends big-time.
Build A Destination for All Gamers
Core gamers like to visit websites about games. In fact, all of the core gamers I know spend an inordinate amount of time on game websites. More than, say, dog lovers spend on dog-related sites. A lot more. Gamers can’t get enough news, updates, behind-the-scenes previews, prerelease trailers, exclusive screenshots, and pretty much anything else gaming related. We’re geeks and that spells opportunity for a company that has the resources and wherewithal to build a true destination site for core gamers.
But the bigger prize is the casual gamer. Right now they’re spending all their time on Facebook. So what can be done to create an online destination for those customers who couldn’t give a hoot about exclusive downloadable content for Black Ops or director’s cut footage of Assassin’s Creed? Build a go-to destination for all things casual and social games: Flash games, social games, virtual goods storefronts, forums, friend list aggregation, exclusive content and more. Maybe Amazon alone has the sheer negotiating muscle, online technical horsepower and a massive installed customer base necessary to do deals with pretty much any online game site to bring access to various features, exclusives, virtual goods marketplaces, and more to a single online location.
Build these two ‘made for gamers’ online destinations, combine them with the incomparable ease of Amazon’s purchase process, their recommendation engine, and all the other online shopping bells and whistles they’ve pioneered over the last decade, and you have a gaming Mecca that will have hardcore and casual gamers surfing to and staying glued to the site hours at a time, multiple days per week.
Amazon has the resources. But the big question is do they have the ‘gaming DNA’ and the other intangibles to get it right? Or would they be like Microsoft who (except for the Xbox) has the resources but never seems to get things right so they do them over and over again, getting them just a little less wrong each time.
Make the Game Industry Your Best Friend
The major game publishers are a powerful group and Amazon, I’m sure, already wields a lot of pull with EA, THQ, Activision and the rest through its sheer distribution power. But, are company insiders doing all they can to exploit that influence? If Amazon wants to become the game industry powerhouse it seems to be driving for, they might want to spend more time wheeling and dealing directly with the publishers and the console makers. Seriously, why don’t we see an Amazon video game exclusive every week of the year? A specially priced Xbox 360 game bundle available only on Amazon? How about a deal where you buy a ‘gaming computer’ and receive 5 AAA PC game downloads free? Hell, Amazon could even pre-install the games for the customer and send along the boxed product with a digital download license included!
In this cutthroat business, it would behoove Amazon to open the wallet and pony up for special content deals, after-market DLC exclusivity, exclusive demos, and more. How many other companies, online or otherwise, can pull something like that off? Wal-Mart maybe? A quick check of BestBuy.com shows they have a slew of “Best Buy Exclusives” for the gamer. Amazon, nada. Sure, they have “Game Deals” and “Bonus Offers” and, to be fair, they give some great pricing breaks. But they can do better. And if they want to own this category, I mean, be the really Big Dog, they can do it by establishing top level, in-their-face contacts and relationships with everyone who matters in the games industry.
Adopt Retail’s Advantages
A lot of people like the activity of browsing store aisles. Especially game and toy stores. And especially people who aren’t hardcore gamers. Nothing is as viscerally appealing as picking up a box and reading the copy, heading over to the magazines to read a review, or asking an obvious game guru with multiple body piercings what he or she would recommend. If Amazon wants to put serious distance between them, GameStop and even Walmart in the games business, they need to bring the best of the retail, brick-and-mortar experience online.
First off, that means customer service. I know, Amazon has the best online customer service in the world. But when Grandma walks into GameStop, nothing beats a salesperson who breathes, eats and lives games for recommendations and suggestions. It’s also nice to be able to pop in a disc or two for a quick demo to help out with the decision making if you’re not already positive what that $60 in your pocket is buying when you walk into a store. Both of these things can easily be overcome with a 24/7 staff of game gurus (not the same folks answering support calls for hand lotion and sofas) who are passionate about making sure Grandma gets a great birthday present for grandson Bobby and, because of her experience, will be coming back for every gift-worthy occasion because, well, by the second purchase, Amazon is going to know everything about Granny’s grandson, his new PS3, his little sister who just inherited his DS, and so on. The customer service disadvantages of being online are easily turned into customer service advantages that can’t be touched by any brick-and-mortar outlet.
Seriously, when it comes to making the online game shopping experience a real pleasure, there are many options available that aren’t currently being exploited.
Make Used Games a Win, Win, Win Proposition
It’s safe to say that the game publishers don’t like the sale of used games. GameStop just announced that nearly 50% of this latest quarter’s profit came from pre-owned games. That’s gotta piss off all publishers and all of those developers who depend on back-end royalties to make payroll. But for now, it’s not illegal for a kid to sell their used copy of Grand Theft Auto to GameStop any more than it’s illegal for them to sell an old pair of jeans at a garage sale. People have been selling used media – games, books, and movies – for years without much of an outcry but, then again, never before has the sale of used media been done on such a massive scale as is being done now by the likes of GameStop, Play N Trade and, yes, Amazon. So even though EA, Activision, Sony, and Nintendo can’t do anything to stop them, nor do they want to put the pressure on since they sell a ton of product, it still might work to Amazon’s advantage explore ways they might be able to work with the publishers in this area that would benefit everyone – Amazon, the publishers, and especially the gamers. Here are just a few ideas:
- Offer a coupon off of a new game from the same publisher if they buy it at the same time.
- Put together ‘New and Used’ bundles that get rid of not-so-hot used games for free when gamers buy a new game. Include that discount coupon mentioned above.
- Use the Used Games business as a gifting machine: Every time someone buys a used game as a gift, send along that same coupon mentioned above, or a different one.
- Establish a Game Club where users can get used games for free after a certain number of new game purchases.
Again, the ideas are there. If Amazon were to work directly with the game publishers, even more ideas could emerge. In the end, used game sales will never be ideal for the industry, but when a major retailer is willing to work to make it a better situation, it’s definitely worth exploring.
The Amazon Advantage
Amazon recently announced the formation of its own movie studio. What do you think; maybe give it three months before they announce the acquisition or formation of a game developer and publisher? Some time back, Amazon announced plans to launch an Android app store. Recently, we at AFK received a mass-email from Amazon asking us to sign an NDA so we could be brought into the loop. We filled it out and are awaiting the incredible inside opportunity. If moves like this don’t spell land grab, I don’t know what else would.
Amazon has spent a decade growing into the online retail 800-pound gorilla and now has the experience, resources, and muscle to leverage a great deal of what it’s built outside to help it win inside the gaming space. When it comes to doing deals, size matters. Sorry if I sound like the ultimate Amazon fanboy. Being the global gaming 800-pound Gorilla is an achievement to which Amazon can aspire. While it might not seem possible, just a few weeks ago the industry collectively wet its pants because some analyst said Zynga’s valuation was higher than EA’s. After all the “that’s crazy talk” epithets were done flying around the Net, folks actually sat back, nodded and thought, “if not now, maybe soon…”
Let’s face it, if that can happen, Amazon can become the major force across the board. When you’ve got the money, the infrastructure, and the installed user base of Amazon.com (assuming they can just get past that coolness issue) it might happen sooner than we think.