Will Amazon.com, Inc. (AMZN)’s Plan In Gaming Business Hurt Traditional Gaming Vendors?


Amazon.com, Inc. (NASDAQ:AMZN) is all set to enter the competitive gaming business. Amazon is well known as the company which does almost everything like retail business, cloud service, streaming service, phone business and so on. Add gaming to that long list, as the company is venturing in to the gaming business. Amazon.com, Inc. (NASDAQ:AMZN)’s target is not to just enter the gaming business but to dominate it as they do in the web services. CNBC’s Seema Mody talked to Amazon Web services Product Evangelist, Ian Massingham at Amazon’s London headquarters about web services and gaming through cloud.

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Mody mentioned that Amazon.com, Inc. (NASDAQ:AMZN)’s new gaming product might not just support the gaming business, but it might also dominate the gamine business. She added that Amazon is currently the world’s largest cloud service company dominating Microsoft Corporation (NASDAQ:MSFT), International Business Machines Corp. (NYSE:IBM) and Google Inc (NASDAQ:GOOGL).

Mody added that since Amazon.com, Inc. (NASDAQ:AMZN)’s inception in 2006, the company has been providing web service support for gaming companies like Supercell and Activision. But with the new product named Amazon G2, Amazon has the potential to take complete control of the gaming business.

“We can provide computing resources in the AWS cloud, which exposes the developer, the features of the high performance graphics card. These high performance graphics card enable you to render graphics with really good performance in a really visually vivid way,” Massingham said about Amazon’s G2.

Amazon.com, Inc. (NASDAQ:AMZN)’s G2 is a network of high end graphics cards, similar to the ones in desktops and PC’s. These graphics cards are manufactured by nVidia and cost around $3000 each, which is definitely not cheap. But Amazon has created a network of thousands of these cards which can provide the 3D graphics solutions with the highest possible performance and clarity.

Massingham feels that enabling the gaming through cloud makes it very easy for them to scale up and down depending on the demand in the outside world. So what can the gaming through cloud do in future? It can enable high resource demanding games playable in almost any smartphone, tablet or Amazon.com, Inc. (NASDAQ:AMZN)’s fire TV set top box by connecting to Amazon’s cloud. This can potentially end the era of downloading/buying games and getting high performance graphics cards to play them.

Amazon.com, Inc. (NASDAQ:AMZN)’s G2 has some complexities associated with it though. Data speed might come as a concern if Amazon’s data center in Europe works for streaming the game in US or Asia. Massigham thinks that Amazon has a huge infrastructure around the globe and this complexity might soon be resolved by various methods, considering that this technology is just a year old.

Massingham added that Amazon has a very good customer base in gaming world right now. Amazon plan to distribute games through cloud sounds good but does this affect the traditional gaming vendors? Massingham feels that the model has changed and this might be the thing for the future.

As of 30 June 2014, Ken Fisher’s Fisher Asset Management hold around 2.5 million Amazon.com, Inc. (NASDAQ:AMZN) shares.

Disclosure: None

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