Amazon Takes Aim at Zynga With Social Gaming Salvo
Technology Editor, CNBC.com
Amazonis joiningZyngain the social-gaming business, and just like the battered Internet game pioneer, it's turning to Facebook to play host to its first entry.
The online retail giant launched its own gaming development team Monday called Amazon Game Studios, along with the the company's first game called 'Living Classsics,' which is built on the Facebook platform.
The move is curious, considering that Zynga — a major player in social-gaming — has suffered heavy blows from investors recently because of growth concerns.
Zynga , who also builds games on Facebook's platform, has seen its stock plunge about 45 percentin the last two weeks. Meanwhile, the company didn't give much for investors to look forward to when itreported earningsat the end of July.
The company, which makes money off selling virtual goods in games, reported a loss for its second quarter and lowered its full year outlook.
So why would Amazonget into a space that seems to have "risk" written all over it? Some say it's because Amazon'sKindle Fire may give it an edge in social-gaming.
"They (Amazon) are making bets in video, bets in books and now they are making bets in social games. All of these areas, they have an extra play on, which is a device strategy, something that makes that device more valuable," said Mark Mahaney, an internet analyst for Citi, on CNBC's Squawk on the Street.
Amazon has been stepping up its game, so to speak, in the social gaming realm recently. With the launch of Amazon Game Studios, it seems the company has no intention of stopping its momentum.
Last month Amazon rolled out a new gaming platform for the Kindle Fire called GameCircle, which had a new feature that allowed third-party game developers to create social-gaming features.
"The one major advantage that Amazon has is its got this huge platform, so they got the ability to promote games in a way that very few other companies can, if they get a hit, they can juice it up very quickly," Mahaney said.
Amazon made the announcement about its new game developers and their first game on their website, stating that Amazon Game Studios is a new team that is "focused on creating innovative, fun and well-crafted games."
'Living Classics' is a game that features "animated illustrations" from books such as from Alice in Wonderland, The Wizard of Oz, and King Arthur. There is a family of foxes that have been seperated in these different scenes and the player must reunite the family by exploring the different scenes from each book.
While Amazon is giving the social game away for free, the company could profit off selling virtual goods in the game.
Although the company hasn't divulged many details about its new gaming branch, they did mention they are hiring to expand the team.
Still, Amazon shouldn't invest too much into social gaming, Mahaney warned.
"As long as it's a small bet for Amazon, it's okay. If they make a big bet in this area that could be a risk for the stock," Mahaney said.