Here's why Amazon has become a major player in games (interview)

Bit by bit, Amazon has become a game company. The world’s largest e-commerce vendor bought its first game studio, Reflexive Entertainment, six years ago. In 2011, it launched its Android Appstore with thousands of apps, including games. In 2012, it launched its first mobile games produced by its own game studio, Amazon Game Studios. And in February, the company bought game studio Double Helix Games, the maker of the Killer Instinct titles. This interest in gaming is no longer accidental. It’s intentional.

In the meantime, it added game capability to its Kindle Fire tablets. Then it launched Amazon Fire TV set-top box with Android games such as Sev Zero. And last week it finally debuted its Fire Phone with games like To-Fu Fury. Skeptics may have seen these moves as tiny nods toward gaming. But Ethan Evans, vice president of the Amazon Appstore, recently painted a vision for gaming’s future at the Casual Connect game conference in San Francisco.

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As Evans noted, the whole universe of games is expanding on multiple dimensions thanks to factors like the growing ubiquity of mobile operating systems. It is remarkable that such glowing comments about the potential of games are coming from someone at Amazon. Ian Vogel, head of Amazon Game Studios in Seattle, also gave a talk about how to develop games on Amazon’s various platforms.

We caught up with Evans and Vogel at Casual Connect. Here’s an edited transcript of our interview.

GamesBeat: When people meet you, do they often ask, “Why is Amazon interested in games? Are you serious?” And what would be the answer?

Ian Vogel: We’re definitely serious about games. A lot of people are paying attention now that weren’t aware of it. We’ve invested in Double Helix, a studio we acquired earlier this year. We’ve invested in some great talent at our internal studios. We have three studios now doing first-party games, as well as a publishing arm.

When we launched Fire TV, the most exciting thing we thought about holistically is that there’s this huge gap between the casual mobile game and the triple-A huge budgets. That’s interesting on a couple of levels. One, we think gamers and customers would be interested in great crafted experiences that are more economical. We, as creators in our studios, are interested in working with smaller teams. You don’t need 1,000 people working on something. You can iterate quickly and things like that.

The gaming industry is at that point of reflection. There’s a huge space there. There’s a lot of opportunity. We’re definitely serious. That’s where we’re going.

GamesBeat: The next “why?” that comes to mind is this. It’s such a small business to you guys. It’s not e-commerce. It’s this tiny segment of a market, from Amazon’s perspective.

Ethan Evans: Maybe? Certainly e-commerce is our largest single business today, but it started very small. Games are the most engaging and in-demand, by percentage of time used, among any digital content categories, both on our devices and others. When we look at games, we see an industry where blockbuster games out-earn blockbuster movies. The total sales in games, I believe, are bigger than all online movie sales and online music. True, it’s not the size of our global retail business today, but we see that potential and that reach.

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GamesBeat: I’d imagine there’s a matter of waking up the corporation to the opportunity and figuring out the opportunity. I take it Amazon has gone through that?

Evans: I’ve been with the company a little longer, so I can speak to that. Amazon has been a physical games retailer for a long time. That’s where our original connection to video games began – selling consoles and games and controllers. It began with the money and customer interest generated by Guitar Hero and all the peripherals we could supply and so on.

There were some moments where the company had to move from having started with e-ink devices and book-reading to realize, “Oh, when we move from black and white e-ink to Android tablets, reading is no longer the primary use case.” When you have a company whose beginning was physical books, and whose digital beginning in many ways was e-books, there definitely had to be some awakening.

Amazon is well-known as a data-driven company. When the first data came back showing the strong games usage on our tablets, that’s when the company transformed. Though there was interest and passion and history around the other digital formats, the customer spoke pretty clearly and said, “I want to play games.” That drove the change.

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GamesBeat: The bulking-up part, what has that been like? Sometimes we hear that there are hundreds of openings for game people, or dozens already hired.

Vogel: We’ve been making games for a few years here at Amazon, but it’s only been about the last year and a half since that awakening Ethan talks about has come forward. We started acquiring and started hiring. But we still want to keep a mindset where we don’t bulk up too fast, where we stay focused on smaller teams and crafted experiences.

Our charter, at least for my studio in Seattle, is to make great games for Amazon devices using new technology. We have a number of teams working in that mindset. It takes some amount of people, but we’re trying to keep it creatively satisfying and critically smart.

GamesBeat: Do you draw a parallel to some of the original Amazon TV programming? Is it almost like Netflix and House of Cards in some way, where you grow some things inside and own them and get all the value that you can out of them?

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Evans: There’s some convergence there, in that the move to be willing to create original content has happened across all of our businesses. If you look back several years ago, Amazon was not in original content – not only in video or video games, but also in books. Now we’re a book publisher. We work closely to bring authors to market. We’ve done the same thing with video under the Amazon Studios brand. The company, in the digital space, has been much more willing to create content, rather than just act as a retailer. There is an analogy there. It’s a consistent move in most of these areas.

GamesBeat: What were some of the steps that proved this out, that showed it was a good idea to keep pursuing?

Evans: Amazon, about six years ago, acquired our first studio, Reflexive Entertainment. But that was a company with two sides. It also had a third-party casual games distribution business. That aligned well with retail. It was a retail business conducted digitally. But once we had a game studio inside, we started looking at what it means to build an Amazon game. That led to the thinking and proving-out.

What we learned was a lesson that’s probably well-known at other hardware makers. Having your own first-party studio allows you to begin working on a game while the hardware is still on the drawing board. Or, using our cloud services like App Stream that you saw, that lets them start working on it way pre-release. You get that virtuous feedback cycle. The game developer makes the service better and the service makes the game more unique.

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That’s the real genesis of our investment in studios. We realized that we have to drink our own champagne, as the new saying goes. We have to use what we intend to sell. If it’s going to work well for other game developers, the only way to get there is to have our own game studios providing that feedback early.

Vogel: When we’re creating these ideas, we think about—Developers are our customers too. We want our services to be robust. We want to be there on the vanguard. Sometimes that’s challenging as a creative, because pieces are shifting underneath. But that’s a great value for people externally, because we’ve done a bit of that forging internally and helped make that better for developers as well.

GamesBeat: Was getting casual game developers on board a target? Air Patriots wasn’t your typical hardcore game. I was just wondering what area you intended to bulk up on – is there in opportunity in casual games, so you hire a lot of casual game developers, or did you want to expand more in hardcore games?

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Evans: Amazon began because Reflexive was in the casual game business. We began in casual games. We also had an interest in social games. But over time, we’ve evolved. A lot of our current focus, if you look at the titles that are coming out – Sev Zero and some of the other games you’ve seen – is more core.

The driving reason there is that core gamers are more committed generally. They’ll pick a platform based on the content there. They’re a little more decisive or committed or willing to invest based on what they like. Over time, while we have both casual game developers and core developers, we’ve traced an arc where we’re leaning more into core.

Core is also more challenging. It uses our services and pushes the hardware and services further. Those tend to be better tests of things like App Stream, which you saw today. They help us find the limits. That’s a big reason why we’re looking that way.

GamesBeat: How does some of the competition affect this? You can feel like you’re being aggressive or feel like you’re being careful and measured. Microsoft’s game business knew that the second they turned un-profitable, they could get the chop. They were always growing, but very carefully. Yet you’re surrounded by people who are making games on different platforms, and if they’re faster and more aggressive, you never catch up.

Vogel: It goes back to what we were talking about earlier, about that market. On one end of the market, you have indie games – small teams, highly iterative, making something like Spelunky. They’re going to be quicker and more agile, but they’re limited in what they can do. In our first-party studios, we’re looking at pushing new technology that will eventually find wider use among different people. All I can say is that creatively, we look at them as inspiration. We don’t really compare ourselves. We think about what our customers want, and if we can deliver something of a quality that they’ll want it.

If you saw the launch of Fire TV, we had games from Telltale. We had Minecraft. Double Fine was another. We had a lot of great titles that we were happy to have out there. They fit that mid-market opportunity. That’s my holistic approach. We’re not really keeping tabs on what’s going on in the industry, but if we see something that’s valuable for customers, we want to pursue it.

GamesBeat: It does seem like a section of the market that’s not really owned or addressed by a particular company.

Vogel: The middle market is a huge opportunity. There are lots of markets that we don’t even know about. We have to go out there and find out how it’s broken up. But we can point to what I was saying earlier. There’s a huge space between casual and console. I’d love to find out what’s in there going forward.

GamesBeat: Can we expect, with every Amazon hardware platform, that there will be games showing up there? If you do a new spin on the phone or the set-top, that’s an opportunity for more games?

Vogel: We have a lot of teams working on different types of games. Some of them take longer or shorter amounts of time. We definitely want to make games for our devices. We don’t comment specifically on road maps, but we’d like to get as much out there as we can.

GamesBeat: Is it mostly content made in Seattle now, or are you spread out more now?

Vogel: We have three first-party studios now, one in Seattle and two in Orange County. We mentioned Reflexive and Double Helix. But we also have the publishing arm in Seattle that’s working with developers all across the world.

GamesBeat: Is it the same sort of differentiation there? Can you make a game across platforms or cloud-ify it to run on anything? Is there an advantage that Amazon can offer?

Vogel: We just released two very good games on Fire Phone, To-Fu Fury and Saber’s Edge. That’s an example of the breadth of what we’re trying to do. We have some teams working on smaller platforms and other teams working on larger platforms.

I’m doing a speech tomorrow on some of the App Stream game usage. We’ve got at least one game we’re going to show that uses App Stream to push something we’ve never seen before on a tablet. We try to index off what we can do that’s unique to Amazon and great for the customer. That differentiates us.

GamesBeat: Some people identified an interesting strategy years ago now, which was the Android micro-consoles. It’s an interesting opportunity, but I wonder why it’s happened so slowly. The theory a few people talked about a few years ago was, “People love these free-to-play games on iOS, so why don’t we do that in the living room and disrupt the $60 game market?” But the reality hasn’t materialized in the way a lot of people thought it would.

Vogel: I think that’s going to change. Anecdotally, speaking for myself, hardware is hard. But we also had to get a sense of what customers want. What was great when we started taking the Fire TV to developers was that they were saying they wanted to buy the device themselves. That was the inflection point we needed to get something we could show, that we were proud of and that we thought customers would like and that we thought mattered to developers.

GamesBeat: You had the hardware to set this in motion.

Evans: There’s a lot of demands on a piece of hardware like that. It has to be economical. It has to be great for video, because that’s an expectation. It has to be great for the games that it brings, competitive in that space.

My first job at Amazon was running Amazon Instant Video. The other thing we learned in that business is that claiming space in the living room is very hard. The devices don’t turn as quickly. The desire to put something else in your complicated home entertainment setup is a tough barrier to get people over. Getting to where we had the right offer was challenging.

GamesBeat: People could argue that Amazon has done this well, but maybe too slowly. There are 35 million iOS devices being sold each quarter now or maybe 45 million if you count iPads. It’s hard to compete with that. You’re selling your first phone now.

Evans: It’s hard to call this a mature market, but it’s a market where others have moved first, certainly. What I’ve learned inside Amazon is that we commit to things for the long term. I often challenge people to think of something that Amazon has started and not stuck with. Some of those efforts grew very quickly and some of them grew more slowly, but it’s very difficult to find something where Amazon hasn’t, over time, gained expertise.

Everything we do, we aspire to have the market segment leader immediately. But not everything we do goes that way. But that doesn’t dissuade us. We believe we have something unique to offer customers, that’s important to our customers. We focus on that and stay with it. The long-term results speak for themselves.

Vogel: Creatively, what many of us are attracted to is that track record behind the brand, the technological prowess, and that long-term vision of things. It’s intoxicating to a creative person. You’re not on a two-year cycle to just get the next title out. The customer focus is real and I love that about being at Amazon. That can stop a conversation at any level: what’s the value to the customer?

GamesBeat: It’s an interesting collection of assets or properties that Amazon has here. How do you think of them as part of one company or one platform? You have app stores. You have AWS. You have the App Stream. You have all this cloud technology. You have game studios and so many other things. Do you think of them as something that can be collectively all turned toward games?

Vogel: I should be careful here, but I feel like it’s an interchange. We’re driving hardware specs and helping different teams understand what gamers want while they’re thinking about a broader consumer base. It’s not a giant ship that needs to point in one direction. It’s a series of things that feed together to all meet different requirements.

Evans: I’d compare it to watching a flock of birds. By design, they all move generally in one direction, but they’re not forced to all fly in one single line. The way we maintain the individuality of each effort and the innovation is not to top-down plan and say, “Everything in Amazon will address this market or that market in this specific way.” But we certainly think a lot and talk across groups about how to coordinate, how to serve this market, what you have that we can use, what we have that you can use.

We very purposefully keep that coordination more informal, because we see that if you try to rigidly orchestrate—Our experience watching others is that that can slow down. To return to the bird analogy, we’d rather have everyone flying as fast as they can and heading in the same general direction than trying to line everyone up perfectly.