By Sarah E. Needleman
Amazon.com Inc.'s yearslong effort to invade the $130 billion
videogame industry is hitting a rough patch.
The company last week laid off several dozen employees from its
division that develops videogames, according to people familiar
with the matter. The layoffs come as Amazon has struggled to
produce a hit and make inroads with internal software it hoped
would lead more game developers into becoming customers of its
cloud service, Amazon Web Services.
An Amazon spokesman declined to specify exactly how many jobs it
eliminated. In a statement, the company said it is reorganizing to
focus on two games under development and new projects, and would
assist the affected employees in finding jobs within Amazon.
Videogames publication Kotaku earlier reported on the layoffs.
Amazon's troubles in videogame creation show how even one of the
world's biggest companies can struggle to break into different
markets. The online retail giant causes concern among companies in
other industries when it moves into their businesses. Amazon has
become a leader in cloud computing, a major Hollywood studio and is
emerging as a threat in advertising, logistics and health care.
It has had its missteps, too. Earlier in the week, Amazon said
it would shut down its restaurant delivery service after it failed
to gain traction. Its attempt at selling its own smartphone failed
several years ago.
Amazon's overall push into videogames isn't a bust. The company
in 2014 purchased for $980 million Twitch Interactive Inc., a
live-streaming platform beloved by gamers. Last year, people spent
505 billion hours watching live-streams on Twitch, up from 355
billion in 2017, according to its own data. Wedbush analyst Michael
Pachter estimates Twitch made $400 million in revenue last year,
double from the year Amazon purchased it.
Amazon's videogame woes have mostly stemmed from its Amazon Game
Studios unit, which the company formed in 2012 and today has
roughly 800 employees across three studios in Seattle, San Diego
and Irvine, Calif.
Amazon Game Studios initially focused on publishing other
developers' mobile games, but in 2015 it switched to developing its
own titles for personal computers. The unit announced in 2016 that
it had three significant PC games under way. Since then, one has
been canceled, while the other two remain under development.
"In spite of our efforts, we didn't achieve the breakthrough
that made the game what we all hoped it could be," Amazon staff
wrote in a Reddit post last year revealing the cancellation of
"Breakaway," one of the three PC games it announced. The company
had described it as an online multiplayer "mythological sports
brawler."
One additional PC game was never announced publicly but has been
canceled, according to people familiar with the matter. Amazon Game
Studios last year released a car-racing title called "Grand Tour
Game" for consoles, but it has sold poorly.
To aid its efforts, Amazon recruited several industry
heavyweights over the years, including former Sony Corp. executive
John Smedley and game designers Kim Swift and Clint Hocking. Mr.
Smedley still works for the company, but Ms. Swift and Mr. Hocking
left years ago.
Like Hollywood movies, videogames can take years to make, and it
isn't unusual for some to get scrubbed upon receiving harsh
feedback from testers. The game-creation business is so competitive
that success in it can be elusive even for a cash-rich company like
Amazon.
The usual game-industry headwinds aren't entirely to blame for
Amazon's challenges, according to current and former employees.
Amazon sought to build powerful games off software it acquired in
2016, with the goal of enticing more game makers to use its cloud
servers to host their wares online.
The software, a so-called engine known as Lumberyard, wasn't
built for the kind of multiplayer games Amazon wanted to make, and
the company's efforts to retool it have proved difficult, the
current and former employees said. As a result, making "Breakaway,"
for example, was like driving a train while the tracks were still
being laid down, these people explained.
"They're still ironing out the kinks of what it means to own and
maintain your own engine," said a developer working at Amazon Game
Studios, referring to a separate team responsible for
Lumberyard.
Game engines represent a little known but critically important
part of the industry. While major publishers such as Electronic
Arts Inc. have proprietary game-creation software, scores of
developers rely on commercial engines from companies such as
"Fortnite" maker Epic Games Inc. and Unity Technologies Inc.
Amazon's Lumberyard, which is free for developers, has yet to
reel in a true blockbuster.
Amazon may soon allow its game studios to use other company's
engines, according to people familiar with the matter. That could
potentially propel the development of its games, but also require
Amazon to pay a subscription fee or royalty on sales.
Other tech giants are attempting to break into game development.
Google said in March that it was building a game studio to be led
by Jade Raymond, known for her work on Ubisoft Entertainment SA's
"Assassin's Creed" franchise. The Alphabet Inc. unit also is
planning to launch a Netflix-like streaming service for videogames
called Stadia in November, a move that some analysts expect Amazon
to jump into as well.
--Dana Mattioli contributed to this article.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
(END) Dow Jones Newswires
June 17, 2019 07:14 ET (11:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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