Can Amazon succeed where others have failed?

Amazon.com (NASDAQ: AMZN) is well known as the leading online retailer, as well as being the undisputed champ in cloud computing. The company also is pursuing growth in digital advertising, streaming video, business-to-business(B2B) commerce, video game streaming, and a growing host of electronic devices.

Now, the digital sales leader wants to combine the best aspects of two of its businesses -- cloud computing and video game streaming -- to attack one of the last untapped opportunities in gaming. Amazon plans to launch a cloud gaming service, according to a report in The Information (paywall). However, it is entering a crowded field, as several of tech's biggest companies have similar aspirations.

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Can Amazon succeed where others have failed? Image source: Getty Images.

Mounting evidence

Amazon is working to develop a service that would deliver video games via online streaming, according to the report. The company is said to be in discussions with video game publishers about making their games available via the upcoming service, which wouldn't debut until sometime next year. 

Other sources point to Amazon's current job postings as corroboration, with opportunities for two engineers to work on "cloud games" and another posting that states, "This is a rare opportunity to take a technical leadership role to shape the foundation of an unannounced AAA games business." The company also is working on "a never before seen kind of game," according to reports in The Verge. 

One of the biggest advantages of developing such a service is the potential to draw new gamers into the fold, particularly those who have resisted the call because they're unwilling to pay for a game that they aren't sure they'll like. Additionally, the high cost of gaming hardware with the processing power necessary to play today's cutting-edge games can be a deterrent. Since the games would be installed on massive data-center computers, they could be accessed by much more meager platforms, like smartphones and tablets.

Until recently, such a service would not have been possible, but the rapid adoption of cloud computing, better algorithms, and faster processors are putting the once-unattainable goal within reach.

Inexorably linked

Amazon already has numerous ties to gaming. It's the proud owner of Twitch, the video game streaming platform it purchased in 2014 for an estimated $1 billion. The unit is reportedly generating more than $500 million in annual ad revenue, with plans to double that to more than $1 billion annually.

It also has a division dedicated to gaming -- Amazon Game Studios -- that works exclusively in the area of game development. It offers Amazon Lumberyard, a free, AAA game-development engine that's deeply integrated with both Amazon Web Services (AWS) and Twitch and provides a framework and tools that help developers create video games.

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