Amazon is popularly known as an online shopping platform where people buy groceries, electronics, and all kinds of physical products. However, that’s not all about the company. Amazon has also diversified into the entertainment industry, and they are currently working hard to gain good ground in movie and games production.
This article aims to review the objectives and progress of Amazon in the video game industry. Likewise, this content discusses gaming advertisements and how Amazon might be considering them. Also, we’ll see how merchants could benefit from Amazon’s interest in video game production.
Amazon Progress in The Gaming Industry
Their gaming aspiration started quietly around 2008 and became more evident in 2014 when Amazon acquired Twitch, a video-game streaming platform. Not too long after the acquirement, the company began to recruit teams of video games developers.
In 2016, during a Twitch conference, Amazon announced three computer games they were working on; Breakaway, Crucible, and New World. Breakaway never made it to the market, and Crucible was canceled months after its launch on May 20, 2020. However, they were able to make the New World game come through in 2021.
So far, it has been a challenging experience for them in the gaming industry. Even the New World game has an average rating of 3.2, yet the company is not backing out of business. Amazon has been investing an approximate amount of $500 million annually, all to find a hit. And on October 20, 2020, the company launched Amazon Luna, a cloud gaming platform.
The company’s undying interest only makes people question their gaming objectives. Are they only fueled by their ambition to entertain gamers with fantastic creativity, or there’s more to it? Perhaps, Amazon has a hidden agenda – to create an ad platform in disguise.
Aside from Google and Facebook, Amazon is another giant that is offering digital advertisements to merchants. The company has realized a steady annual profit of over $10 billion from its digital advertising business. And this is just the beginning.
The company could only achieve this much because they know what each individual is shopping online. They have hundreds of millions of buyers and Amazon Prime users across the globe and have records of their products of interest.
Therefore, unlike other companies in the digital ads business, they don’t have to sneak on their users or disrupt their privacy to know the products they love researching. And because of this, the Amazon ads campaign has been very effective for merchants and manufacturing companies that sell on the marketplace.
Amazon ads are straightforward and similar to Google Ads. It’s a pay-per-click campaign that enables merchants to gain a high-ranking position for their products on the Amazon search results. These products are identified by the sponsored and ad tag.
The ads are also positioned on the right side of product detail pages. And they are displayed strategically across different pages on the Amazon website. Also, merchants on Amazon could advertise their products on Amazon video streaming platforms and devices such as IMDb and Fire T.V.
Video games can also be a platform for advertisement, probably why the company is desperate to be a part of the industry. According to an estimation by the bank of investment, about $2 billion ad market could be created in the console industry if the video games creator is willing.
The opportunity therein could also be the reason why Google and Facebook are also diversifying into game creation.
Gaming Advertisement; What Does It Look Like?
Gaming advertisement has been in implementation for a long time. The 1980’s saw the era of Advergame. These are games that are specially designed for ads. The game developers were very cautious about building the game around a product or brand without mentioning or displaying the brand’s name or logo.
In the 1990’s game, developers were more prudent in their designs. They found a way to advertise products in video games without disrupting their essence. Crazy Taxi is one of the games that was produced in this era. Players were made to transport passengers to specific locations in a virtual city. These locations include restaurants like K.F.C., Pizza Hut, and popular stores in the ’90s.
Car brands also advertised their products through video games like Need For Speed, Drivers, and Colin McRae Rally. If you can still remember, cars in these games don’t get damaged. They deliberately designed it this way to create a sense of quality products in gamers.
The 2000s games were more advanced than those made the previous decade years. Game developers in this era came up with dynamic advertisements – one that companies can update and change the contents of their game ads. Ubisoft, the 2005 Splinter Cell producer, was the first to segment an audience. Players saw ads based on their locations and time.
Modern game advertisements include characters wearing branded clothing and the use of real-life gadgets and logistics companies. And recently, in-games advertisements are being rethought. The industry is generating more revenue than both movies and T.V. series combined without ads. They got their boom in 2020 when people were forced to play indoor and online games from their various houses.
The Future of Gaming Advertisements
Although the industry could make more through advertisements, they don’t want to risk boring customers with ads games. However, that doesn’t mean a-no-go-area for advertisers.
The industry might have made a lot during the covid pandemic, but no one knows what the future holds for them. They could be struggling to keep their customers in the coming years. And therefore, they won’t have any other option but to consider blending ads into their future products.
Even with that, the company will have to proceed with caution. John Frelinghuysen, a partner, and managing director at L.E.K. consulting while evaluating game advertisements says that if game developers must capitalize on ads, they must:
- Be ready to develop free games that deliver the same experience as Fortnite, in which ads were blended into from the very beginning
- Create games subscriptions tiers so that budget-conscious gamers would go for a low-priced plan with more ads.
What Does It Mean for Advertisers?
Therefore, considering all the difficulties and precautions associated with game advertising, it would be unreasonable to conclude that Amazon is entering this industry to create an advertising platform.
In fact, according to Amazon Games VP Christoph Hartmann, the main reason why the company is investing in games is that they can’t simply ignore it and claim to be in the entertainment industry. In an interview with the Verge, he added that “It’s almost impossible to imagine a world where you have a foot in entertainment without considering games.”
However, this doesn’t mean the company won’t take their chances if they ever find a way to run ads on games without discouraging gamers. It would be a great marketing opportunity for merchants, especially those producing or dealing in products for young people, if this ever happens.
The number of gamers skyrocketed to about 2.6 billion people worldwide in 2020. And the number is predicted to reach 2.8 billion by the end of 2021. Most gamers fall between 18-35 years, and it’s surprising that many adults above this age group still engage in online video games. This implies that advertisers would meet more customers and get more sales from all age groups and genders.
Also, video games could be a better platform to announce promotions, holiday season offers, and discounts. Travis Scott implemented an advanced version of this on the Fortnite game. Deep in the covid pandemic, the musician held a Fortnite concert. Gamers were given a specific site to go in the game to access the show. A similar version is TENET trailers in Fortnite.
Besides, most of these ads will be in visual formats. Therefore, getting more conversions than the conventional text ads. If implemented cautiously, game advertising might be the next big thing for Amazon merchants. However, merchants must also be prepared to expand their ads budget.
The cheapest game ads rate belongs to dynamic in-game advertising – the type you can insert and remove from games in real-time. It has an average cost per thousand impressions (C.P.M.) rate of $4.00-$12.00. Consoles Integration ads displayed on tiles in Xbox live dashboard cost between $25.00 – $35.00. Meanwhile, advertisements built into the game storyline could go as high as $500K.
As of the time of writing, Amazon gaming intentions are still unclear. It could either be for digital ads or strictly for entertainment. Besides, both purposes can fit together with a great game developer team. So, in a few years from now, Amazon merchants might have the privilege to advertise their brands and products to billions of gamers across the globe.
Therefore, merchants are advised to stay updated with technological advancements. Remember that famous quote from Benjamin Franklin that says, “By failing to prepare, you are preparing to fail.”