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Amazon Restructures Gaming Business amid Google Threat

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Jun. 18 2019, Updated 12:13 p.m. ET

Amazon’s gaming business

Amazon (AMZN) has restructured its gaming division, cut studio jobs, and canceled some titles that were under development, according to a report from the Kotaku. Amazon said the changes are part of its regular business planning cycle. The company seeks to realign its resources with its long-range priorities.

According to Newzoo estimates, the global gaming market generated $134.9 billion in revenues in 2018. The global gaming market could grow to $150 billion in revenues in 2019. Tencent captured the lion’s share of the gaming revenues at $19.7 billion in 2018.

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New growth opportunities

Amazon is restructuring its gaming division due to the anticipation of increased competition in the gaming market. Google (GOOGL) and Apple are gearing up to launch new gaming subscription services known as “Stadia” and “Arcade” in the coming months. Google’s Stadia and Apple’s Arcade services will compete with Amazon’s Twitch for video game developers and players. Google and Apple are focusing on the games business as growth in advertising and smartphones slows down.

Race for gaming dollars

Last month, Microsoft (MSFT) and Sony (SNE) came together on a program aimed at bolstering their competition in the gaming market. The collaboration could put more competitive pressure on Amazon in the race for gaming dollars. Recently, Tencent (TCEHY), the world’s top video game company, bought Swedish game developer Sharkmob to supercharge its gaming business.

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