Amazon (AMZN) Just Doubled Down on Its Video Game Bet

Amazon.com, Inc. (NASDAQ:AMZN) introduced a new competitive video gaming service geared towards developers on Monday. GameOn is the e-commerce and web hosting power’s latest foray into the multibillion-dollar gaming industry and should be a further sign to investors that the video game market is rapidly expanding.

Amazon (AMZN) Just Doubled Down on Its Video Game Bet
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Amazon’s new service aims to allow developers and gamers to integrate and create competitions natively across mobile devices, PCs, and gaming consoles. GameOn, which was built on Amazon’s AWS cloud infrastructure, will also allow gamers to win prizes, most of which AMZN will offer through its e-commerce site.

Amazon sees its new cloud gaming division as a way to profit from the proliferation of gaming and the rise of esports. The basic idea is that millions of people play video games and want to experience high-level competition with real monetary benefits on the line, but not all of them are at the level of professional gamers.

“Game developers have consistently told us they are looking for ways to increase player engagement and retention,” Amazon’s Director of Competitive Gaming, Marja Koopmans, said in a statement. “We built Amazon GameOn to give developers simple, yet powerful tools to foster community through competitive gameplay.”

Some relatively well-known gaming companies and esports teams, including nWay, Game Insight, and Millennial Esports’ Eden Games, are currently using GameOn.

Amazon’s new competitive gaming platform comes nearly four years after the company purchased esports streaming platform Twitch for nearly $1 billion.

The esports ecosystem is expected to expand by almost 40% in 2018 to become a $905.6 million business, based on new estimates from market research firm NewZoo. A majority of this money is set to come from non-endemic sponsors, advertisers, and media companies.

This year, HP Inc (NYSE:HPQ), Intel Corporation (NASDAQ:INTC), Toyota Motor Corp (NYSE:TM), and T-Mobile US Inc (NASDAQ:TMUS) all sponsor Activision Blizzard, Inc.’s (NASDAQ:ATVI) new “Overwatch League,” which models its structure on major U.S. professional sports leagues. Take-Two Interactive Software Inc (NASDAQ:TTWO) and Electronic Arts Inc. (NASDAQ:EA) have also bolstered their partnerships with more mainstream sports.

AMZN looks poised to capitalize on esports while also infusing its e-commerce business with another potential revenue stream through GameOn-based prizes. The company is also set to take on Microsoft Corporation’s (NASDAQ:MSFT) quickly expanding gaming unit.

Microsoft recently purchased a similar tournament and leaderboard-based gaming service called PlayFab, and also just launched its own cloud-based gaming division.

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