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Konvoy Ventures is a thesis driven venture capital firm focused on the video gaming industry. We invest in infrastructure technology, tools, and platforms.

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Amazon launches Luna, acceleration of M&A for exclusive content

Amazon Launches “Luna”, A Cloud Gaming Service

To compete with Google Stadia and Microsoft xCloud, Amazon has announced their own cloud gaming service (“Luna”), which comes with a unique controller, bundled access to content, a Twitch integration (Amazon owns Twitch), and tiered subscriptions. They said that it will initially be available on PC, Mac, Fire TV, iPhone, iPad, and primarily in the United States to start. It will be powered by AWS.

You can sign up for the Luna waitlist here, which will be initially priced at $5.99/mo for access to over 100 games that include ones like Resident Evil 7, The Surge 2, and Control. Interestingly, Amazon said that consumers can pay an additional fee for access to the Ubisoft library of titles (Assassins Creed Valhalla, Far Cry 6, etc). Evidently there are many channels like this in development, segmented by publisher or by genre.

Amazon is well-positioned for this move into cloud gaming given their ownership of Twitch and their expansive AWS business.

A Reflection: there is a paradigm shift underway in how platforms think about content. In the movie industry, studios would have siloed and individual budgets for each movie release. Today OTT platforms like Netflix care less about any individual movie and more about the growth of their overall subscriber base. The entirety of their offering is the overarching factor that determines the success of their platform/brand.

This very same dynamic is happening in video gaming, accelerated by the new cloud gaming platforms of Amazon (Luna), Google (Stadia), and Microsoft (xCloud). Video gaming platforms are bundling content and pursuing an overall subscription model, which lends itself to less focus on any single title and more focus on the overall offering vs their competitors. This is a very positive development for the video gaming industry.


M&A for Exclusive Content is Accelerating

As platforms like Amazon, Google, Microsoft, and others pursue a subscription model, the importance of first-party content will become critical. To that end, each platform is going to actively pursue the following:

  1. Allow smaller or newer studios to list their content on their platform
  2. Partner with established publishers to list their content
  3. Acquire content to make it exclusive to their subscriber base

The third point around the acquisition of exclusive content will be the key differentiator between platforms. For example, Halo is an exclusive title to Xbox which was a key decision factor for consumers back in the day when they were choosing which console ecosystem to join. Today, that same dynamic exists between OTT platforms like Hulu (Handmaid’s Tale), HBO:GO (Game of Thrones), or Netflix (Stranger Things).

One negative to note is that exclusives limit the market for a given exclusive to the host platform and consumers get locked out from exclusive games on platforms they don’t subscribe to.

Just in the past 60 days, here are few of the prominent content acquisitions that took place:

  • Microsoft bought Zenimax for $7.5B (link)
  • Take-Two bought PlayDots for $192M (link)
  • Epic Games bought SuperAwesome (link)
  • Zynga bought 80% of Rollic Games for $168M (link)
  • Stillfront bought Nanobit for >$100M (link)
  • GameLoft bought The Other Guys (link)