Why don’t Google and Amazon understand gaming?

With more money than they really know what to do with, the sprawling hegemony of tech giants like Amazon and Google have all turned their gaze toward video games in recent times, and yet it feels like every venture ends up a mismanaged flop that defies their grand ambitions. So what is it that they keep on getting so very, very wrong?

The last week has been particularly rough for both Amazon and Google. A report into Amazon Game Studios revealed a company pushed to create AAA hits, but without the leadership or understanding of how to get there, leading to the infamous backtrack of Crucible’s release and a slew of projects cancelled before they saw the light of day.

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Then there was Google’s announcement of the closure of Stadia Games and Entertainment, their own internal studios with 150 employees across Montreal and Santa Monica, and an end to Typhoon Studios, their single external acquisition. With former PlayStation and Xbox executive Phil Harrison at the head of the venture, and the high-profile poaching of Jade Raymond from EA to build SG&E from the ground up, they should have been able to create the culture needed to turn Stadia into a contender. Instead, with Harrison’s involvement in particular feeling more like a portent than a good omen, Google have pulled the plug and Stadia is now bereft of first-party exclusives.

Apple deserves to be in this conversation as well, as a company that doesn’t /get/ video games. For decades, they’ve had a love-hate relationship with games, whether it was the small community of developers and porting houses that focussed on the Mac (which included the pre-Halo Bungie), or the almost reluctant acceptance that the iPhone was a gaming platform. Gaming is, ultimately, just something else you can happen to do on their devices, but their attempts to court the market on Apple TV or more recently through Apple Arcade have been mixed.

Ultimately it’s Apple’s TV+ subscription, alongside Apple Arcade, that shows that they are figuring it out. For TV+, Apple founded an internal division to develop their own new and original programming, but they’ve also worked within the wider industry, mimicking Netflix, Amazon Prime and all the others in buying up the rights to TV shows and films, green-lighting outside production companies to create the shows for them. Sure, they’re currently more of an also-ran in the TV streaming biz, but they’re not afraid to spend money while leaning on the existing wealth of knowledge and talent that’s already out there.

But, perhaps the best examples for Amazon and Google to follow are those of other tech giants who decided on a whim to start doing video games: Microsoft and Sony.

Sony stepped into video gaming out of sheer revenge for Nintendo backing out of their deal, aggressively undercutting the competition at Sega, getting into full-on 3D gaming before Nintendo, and crucially adopting new technologies with the CD drive to give themselves a significant advantage.

Meanwhile, Microsoft took inspiration from the PlayStation 2, turning PC-based gaming frameworks and applying them to the goal of making the most powerful console of all time – not much has changed there! The Xbox didn’t come to dominate the industry, launching years after the rampantly successful PS2, but it’s become a significant part of the company and they continue to strive to grow.

What was key for both was that they understood the need for exclusive games, and not just the promise of great intangible things in the future. Sony didn’t start off with a sprawling global network of developers, and so turned to third parties, with Ridge Racer and Rayman notable launch games, while acquiring Psygnosis led to the iconic Wipeout for the Western console launch. Microsoft did the same for the Xbox launch, rounding out a portfolio of launch titles that had them publishing Project Gotham Racing and Dead or Alive 3 alongside the defining Halo: Combat Evolved which truly cemented the legacies of both the original Xbox and Bungie.

At various times, they’ve had to stay the course. Sony, Microsoft and Nintendo have got things very, very wrong at various times: the PS3 was too expensive at launch, the N64 stuck with cartridges in a world of CD-ROMs, the Xbox One was something bizarre about TV? Through those fumbles, they’ve adjusted, reset, and gone again, and also continued to invest. That’s naturally meant founding powerhouse studios to create and support game development, but Microsoft in particular have acquired a succession of studios in recent years, though Sony haven’t been afraid to snap up established independent studios like Naughty Dog, Guerrilla Games or most recently Insomniac Games.

While Amazon’s forays into video games have not gone to plan thus far, their lack of a target platform means that they could have the time to find their identity. By contrast, SG&E had the burden of going up against Sony and Microsoft’s first-party studios and the expectation of being able to create something to truly leverage all the advantages that streaming games could offer.

Google’s statement explaining the closure of SG&E makes it sound like their CFO got cold feet about the project, realising half a decade too late that success in video games is far from a sure thing. Maybe they’re avoiding the sunk cost fallacy, maybe the engagement with Stadia and its rigid business model simply hasn’t been there, but either way, history shows the level of commitment that is necessary. Google hired the right kinds of people to lead and get their internal studios off the ground, and given time, they could have created something special that truly justifies Stadia as a platform. That takes time though, and previous entries into console gaming in order to buy themselves that time, they also needed to go out and bring third parties to their platform with more than just parity.

In some ways, Microsoft have beaten the path that Google needed to take over the last few years, with its string of studio acquisitions and the announcement of the ZeniMax (and thus Bethesda) buy out. With the inclusion of cloud streaming, they might just beat Stadia at its own game too.

Given that they’re both capable of drawing from a decent proportion of the world’s money, we shouldn’t write off either Amazon or Google from the equation. Stadia could still be a viable platform if it moved into a Netflix style subscription and continues to roll out directly onto smart TVs, while Amazon still have their own streaming platform Luna to launch around the world, as well as a few projects still in the works. It’s more likely though that we’ll see them behave much like Apple have, poking at gaming with a stick and a hint of disdain rather than embracing it fully.

As Microsoft and Sony have proved, you have to go all-in on this business to succeed, and when things don’t go your way, you need to learn from your mistakes. Quitting isn’t likely to find you success.

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