The game development industry is about to get a bit more crowded, and for one big developer, that could mean some rough times up ahead.
Amazon is getting into the gaming business, with the announcement Monday that it is launching Amazon Game Studios, as well as its first social game.
“Why is Amazon making social games, you ask? Good question! We know that many Amazon customers enjoy playing games – including free-to-play social games – and thanks to Amazon's know-how, we believe we can deliver a great, accessible gaming experience that gamers and our customers can play any time,” Amazon said on its blog.
At the same time, the company also announced the release of its first social game, called Living Classics. The game features a family of foxes have to be reunited after wandering into scenes from classic literature, such as Alice in Wonderland, The Wizard of Oz, and King Arthur.
“Players help to reunite the foxes by exploring beautifully illustrated scenes and spotting moving objects. You can visit friends, share rewards you’ve earned, rediscover famous stories, and reunite fox families,” Amazon says.
The game is currently available to be played for free on Facebook.
A shot at Zynga while it’s down?
Given that the game is debuting on the Facebook platform, an arena that was, at one point, ruled by Zynga, it is hard to not see this as anything but a direct shot by Amazon at the big time game developer.
Zynga, which is the developer of games such as Farmville, CastleVille and Words With Friends, once had a fairly dominant stake in Facebook: 19% of Facebook’s revenue came from the game development company in the first half of 2011. 12% came directly from Zynga and 7% came from the revenue generated by ads on Zynga games.
Zynga’s percentage of Facebook revenue was down to 14% in the first six months of this year.
At the same time that Zynga’s importance to the company is fading, Facebook has opened itself to other game developers, and now Amazon has used the opportunity to expand into a new area of development.
Zynga missed its Q2 estimates, reporting a loss of 3 cents a share, on revenue of that grew 19% to $332 million, far short of analysts' expectations of 5 cents a share on revenue of $345 million. As a result, Zynga stock dropped 40% in a single day
Zynga blamed the disappointing quarter on Facebook, after it began to emphasize new games in its news feed and notifications. Prior to that, Facebook gamers would have had to know what games to look up and install or seen what their friends were playing. Bigger games from bigger companies, such as Zynga, had previously had the advantage over smaller companies.
Facebook's new plan gave smaller companies a better chance against the bigger players.
Having such a heavy competitor could not come at a worse time for Zynga, which has seen multiple lawsuits come across in the past few weeks.
Not only is it being investigated for possible insider trading, after it was revealed that executives and investors sold off portions of their stock months before it crashed, but they are also being sued for copyright infringement by Electronic Arts, makers of the Sims.
Zynga’s stock was up over 8% on Monday, ending at $2.95 in after hours trading.
Watch the trailer for Living Classics below:
(Image source: www.facebook.com)