Amazon Spent Over 15 Years Trying Their Best to “Disrupt” Steam, But Admittedly Failed to “Crack the Code”
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Despite Amazon being one of the largest companies on the planet, with a near-endless amount of resources and money, their gaming venture hasn’t turned out as successful as they’d hoped for it to be. Specifically, going up against Steam, which they invested over 15 years trying to beat the platform and win over gamers simply because they were the much bigger company.
It turns out that just because you have the resources and money to invest more than the competitor doesn’t mean you can brute force your way in, which has been a hard lesson that a former vice president of Amazon recently acknowledged.
Amazon Learns That Not Everything Can Be Bought
If you’re a PC gamer, you likely use Steam as your main gaming platform for purchasing and playing video games. I know I do, and it’s been my platform of choice for as long as I can remember it being open on PC. That’s not to say that there haven’t been some other major platforms that have come to the scene recently, with the Epic Games Store probably being the closest alternative storefront that offers similar features (even that’s a stretch.) But just a few years ago, there was another major player, Amazon, that tried to do what Steam was doing, but “better,” with streaming services such as Luna, Twitch, and their own Amazon gaming storefront if there was a company that was going to outdo Steam, then it would have likely been Amazon considering the amount of resources they have.
Of course, we all know how that ended up going, with Luna eventually shutting down and multiple other attempts by Amazon ultimately failing.
It seemed like a lesson that Amazon couldn’t master, which is what the former vice president of Amazon Prime Gaming, Ethan Evans, alluded to. He says that despite being Goliath, they underestimated just how powerful David (Steam) was.
As VP of Prime Gaming at Amazon, we failed multiple times to disrupt the game platform Steam. We were at least 250x bigger, and we tried everything. But ultimately, Goliath lost. Here’s why:
The 15+ year long attempt to challenge Steam started before I was VP of Prime Gaming, but we never cracked the code. Not under my leadership or anyone else’s. The first way we tried to enter the online-game-store market was through acquisition. We acquired Reflexive Entertainment (a small PC game store) and tried to scale it. It went nowhere.
Then, after buying Twitch, we created our own PC games store. Our assumption was that gamers would naturally buy from us because they were already using Twitch. Wrong. Finally, we built “Luna,” a game streaming service that let people play without a high-end PC. Around the same time, Google tried the same thing with their product “Stadia.” Neither gained significant traction. The whole time, Steam dominated despite being a relatively small company (compared to Amazon and Google).
The mistake was that we underestimated what made consumers use Steam.
It was a store, a social network, a library, and a trophy case all in one. And it worked well.
At Amazon, we assumed that size and visibility would be enough to attract customers, but we underestimated the power of existing user habits. We never validated our core assumptions before investing heavily in solutions. The truth is that gamers already had the solution to their problems, and they weren’t going to switch platforms just because a new one was available.
We needed to build something dramatically better, but we failed to do so. And we needed to validate our assumptions about our customers before starting to build. But we never really did that either.
Just because you are big enough to build something doesn’t mean people will use it.
He then reflects that Amazon should have learned to understand customers before making these big moves to try and get them. They failed to do so and threw money into their venture, which made them believe that gamers would flock to them, all because they were the bigger company that could have squashed the much smaller competitor. As he says, they severely underestimated just how big Steam was as a platform.
It’s a very interesting look at behind the scenes that Evans provided, a rather helpful one that should serve as a warning to any major publisher thinking they could just brute force their way into a market. Though I can’t imagine Steam ever being toppled, the alternatives could still learn much from Amazon’s mistakes if they ever want to be at least successful.
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