Amazon entered the race to become the “Netflix for gaming” on Thursday with a subscription service designed to challenge Microsoft’s Xbox Live, Sony’s PlayStation Now and Google’s Stadia.

The launch of Luna — a $5.99 per month cloud-based service offering games that can be played across PCs, televisions, tablets and smartphones — pitches Amazon into battle for a slice of a gaming market expected to surpass $200bn in revenue this year, according to market intelligence group IDC.

The news comes just days after Microsoft spent $7.5bn acquiring the games developer ZeniMax, and in the same month Microsoft and Sony allowed customers to place pre-orders for their latest generation of games consoles.

Amazon said the world was entering “the golden age of gaming” and it would offer popular titles like Sonic the Hedgehog and top-tier games such as Assassin’s Creed to be played without expensive gaming equipment. A multi-device controller Amazon is selling will cost $49.

“This is just the start — Game Wars is the new mega-cap tech race,” said Neil Campling, tech analyst at Mirabaud Securities. “Amazon, Apple, Google, Facebook and Microsoft all want to play.”

Amazon already owns Twitch, a company it acquired for $1bn in 2014 that allows users to watch live-streaming games. It did not specify a date for the launch of Luna.

The company may have been tempted to dive deeper into gaming by following traffic patterns through its cloud computing division Amazon Web Services, Mr Campling added.

READ ALSO  P&G lifts forecast as cleaning boom rolls on

“It reminds me of how 35 per cent of evening traffic on AWS was on Netflix years ago,” Mr Campling said. “That led to them launching Prime Video. They can see how hot this industry is and want a seat at the table.”

Sarah Hindlian-Bowler, head of software research at Macquarie, recalled that two years ago Microsoft was already saying that its future competitors were not console makers, like Sony and Nintendo, but the likes of Google and Amazon who can build high-speed streaming services.

“The ways in which people are gaming are very different now,” she said. “They’re not even gaming in the sense of, ‘I’m trying to compete to get to the end and win this game’. They are actually living in virtual worlds, socialising in virtual worlds and buying things in-app.”

Mr Campling added: “Gaming, in many ways, is becoming the newest form of social media. And that’s what people don’t realise . . . If you go back just 10 years, the industry was the same size as Hollywood [by revenue]. Today it’s four times the size and growing at a double-digit rate every single year.”

Luna is Amazon’s answer to Google Stadia, a cloud gaming service launched in November 2019 that is widely considered a flop.

Analysts say Stadia arrived without enough games and the wrong economic model, in which users paid a monthly subscription fee but then were still charged extra for in-demand content.

“You have to be very upfront with your users if you’re offering them a flat subscription fee,” said Ms Hindlian-Bowler, who said parents were often getting unexpected credit charges that resulted in wide cancellations.

READ ALSO  U.S. Bancorp Focusing On Costs To Offset Spread Income Headwinds (NYSE:USB)

Amazon said that, on top of free content, Luna would offer consumers dedicated “gaming channels” for a fee, each offering a range of top-tier titles. The first such channel partner is Ubisoft, maker of the Prince of Persia franchise and other games.

A gaming service was just one of several announcements from Amazon on Thursday in a 45-minute live-streamed event that demonstrated the ecommerce group’s ambitions to be a big player in consumer hardware.

It announced sphere-shaped smart speakers equipped with improved Alexa voice-assistant capabilities, a security camera for cars — including a partnership with Tesla — and a miniature drone that it said could fly around indoors providing video security.

Ben Wood, analyst at CCS Insight, said Amazon was moving so quickly that “Apple risks getting left behind” in the growing technology segment for smart home products.

“Amazon is becoming increasingly pervasive in our daily lives and this should be a significant concern for Amazon’s competitors.”

Via Financial Times