Amazon Bets on Cloud Gaming Amid Rising Hardware Costs

Amazon's head of gaming, Jeff Gattis, has indicated that increasing technology expenses will likely lead more individuals to stream games online rather than purchasing new consoles. Gattis informed the BBC that advancements in streaming technology have made it more feasible than in the past, though he acknowledged some consumers will continue to favour owning dedicated gaming hardware.

Integration with Prime Video

This prediction coincides with Amazon's announcement that it is incorporating its cloud gaming service, Luna, into the Prime Video application. The service will now be accessible alongside films and television programmes. Cloud gaming enables users to stream and play titles from a remote server, using devices such as phones, tablets, or controllers, bypassing the need to download and run games on local hardware.

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Gattis highlighted a significant potential audience beyond existing console owners that Amazon aims to engage. He stated that while between 2.5 and 3 billion people globally play games, only a small proportion own dedicated gaming equipment. He suggested that streaming games could appeal to those unwilling to spend hundreds or even thousands of pounds on consoles or gaming PCs. "As hardware becomes more expensive, and as streaming technology continues to improve, I think you'll naturally see more people asking whether they actually need that dedicated device," Gattis told the BBC.

Market Challenges and Past Failures

The cost of gaming hardware has seen a notable increase recently, driven by rising component prices. Both Sony and Microsoft have adjusted their console prices upwards, and Valve's new Steam Deck OLED model starts at £879. Despite cloud gaming being long presented as the future of the industry, previous attempts, such as Google's Stadia, have not achieved widespread user adoption, leading to Stadia's closure in January 2023. Joost van Dreunen, a professor of games business at NYU Stern, noted that mass market adoption has been hindered by issues including latency, inconsistent performance, and the absence of a strong business model. "Gamers are willing to trade a little fidelity for convenience, but not to pay premium prices for something they don't own which stutters when the Wi-Fi dips," van Dreunen explained, as reported by the BBC.

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Christopher Dring, editor-in-chief at The Game Business, suggested that while an audience exists for high-end games, technical requirements can be a deterrent. He also pointed out that publishers might be hesitant to embrace subscription models due to the potential impact on revenue from traditional game sales. Dring expressed doubt that consumers would pay full price for a game solely to stream it.

Future Outlook

Van Dreunen acknowledged that the escalating cost of consoles could influence consumer behaviour. "For the first time in the industry's history, consoles are getting more expensive toward the end of their lifecycle," he observed. "I'm skeptical that it will immediately push more players to the cloud quickly, but I do predict a gradual adoption of alternatives." Amazon Luna is currently included with a Prime subscription and, in the US and UK, will be accessible via a 'Games' tab on Prime Video for Fire TV users.