Parks Associates Blog

Wednesday, October 22, 2008

Jeff Bezos a Gamer at Heart?

Jeff Bezos, founder and CEO of Amazon, apparently is a gamer at heart. I'm not sure which gamer segment he belongs to. Maybe dormant gamers?

Over the past several years, Jeff has invested in Second Life (a 3D virtual world company) and Kongregate (Youtube of games), and two days ago Amazon bought Reflexive for an undisclosed amount. Reflexive is a casual game developer, portal, and digital distribution platform. It is relatively unknown compared to some of the bigger casual game companies like Real Networks, Big Fish, Popcap, Wild Tangent, and Oberon Media. Amazon has been actively diversifying its business, recently introducing digital stores for music, videos, and books. Games are a natural extension of that strategy. Just another thing to sell through its massive server clouds and customer list, right? Don't be surprised if you see a list of recommended casual games like card and puzzle games when you purchase a box of diapers from Amazon. If you are a Kindle owner, now you can take a quick break between books!

The casual gaming industry has grown up to be a billion dollar business in the last couple of years. The space is becoming extremely crowded. Many large companies, including the ones mentioned earlier, have become vertically integrated. Big Fish and Oberon recently got a big pile of cash to further grow their business. Big Fish got $83 million and Oberon $20 million. In the meantime, large portals such as Yahoo, MSN, and AOL still maintain a presence in the space. The industry is also at a time of change. Many companies are trying out new business models, including ad-supported, session-based, and subscription-based models, instead of relying on the download to own model, which is likely Amazon's starting point. It will be interesting to see how Amazon's gaming strategy plays out. Keeping the Reflexive team intact will be a good first step.

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