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8/7/2012
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Amazon Enters Social Gaming Market

While social gaming pioneers Facebook and Zynga struggle to regain their footing, Amazon charges ahead.

5 Facebook Rivals Hot On Its Heels
5 Facebook Rivals Hot On Its Heels
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Amazon is entering the social gaming market just as two companies that pioneered the space, Facebook and Zynga, are struggling to figure out better ways to make money.

On Monday, Amazon launched Amazon Game Studios and its first social game, Living Classics, hosted on Facebook.

Amazon says that it has started making social games because it believes it can make social games well. "We know that many Amazon customers enjoy playing games--including free-to-play social games--and thanks to Amazon's know-how, we believe we can deliver a great, accessible gaming experience that gamers and our customers can play any time," the company explained on the Amazon Game Studios website.

Clearly, there's more to it than that. As Google understood when it launched Google+ Games, offering unique content builds customer loyalty and engagement. Amazon may see game content as a way to help differentiate its Kindle hardware from other Android devices and to add value to its platform.

[ Apple's slow-motion breakup with Google claims another casualty. Read Apple Removes YouTube App From iOS 6. ]

An Amazon spokesman said the company isn't sharing details beyond what was published on its Amazon Game Studios website. The company already has developed several game titles under its A2Z Research and Development Games Studio, based in Orange County, Calif., for iOS, OS X, and Windows.

Meanwhile, Facebook, struggling find a way to lift its stock price after a bungled IPO and disappointing Q2 earnings, is dipping its toe in the world of gambling. On Tuesday, the company launched Bingo Friendzy, a real-money online bingo game operated by Gamesys for U.K.-based adult Facebook users. A real-money slot machine game is also in development. Previously, Facebook has focused on virtual money.

Julien Codorniou, Facebook's head of European gaming partnerships, told The Financial Times that gambling is well regulated in Europe and makes sense for the company because it's a social experience.

Zynga has fared no better, reporting a Q2 loss of $22.8 million in July. The company blamed Facebook in part, due to Facebook algorithm and UI changes that Zynga claims diminished player engagement. Sterne Agee & Leach analyst Arvind Bhatia told Bloomberg at the time that social gaming is "starting to look more and more like a fad."

Compounding Zynga's problems, gaming giant Electronic Arts last week sued Zynga, claiming that Zynga's new game The Ville copies too much from EA's Sims Social game. Zynga filed a similar game copying lawsuit last year against Brazil-based game studio Vostu. Zynga and Vostu settled that claim last December for an undisclosed sum.

Amazon, however, may be able to make social games pay off more effectively than the market pioneers. Unlike either Facebook or Zynga, it's a hardware company and an e-commerce company, and it could find ways to drive revenue in its existing businesses through its games. That is, assuming social gaming isn't just a fad.

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