Gaming Guru Alex St. John on Amazon, Business Models, and the Future of Casual Games

It’s always interesting when a huge player dives into an established market. Will they radically shift the dynamics and displace their competitors? Or will they be too slow to innovate, and sink to the bottom like a bloated whale? Earlier this week, when Amazon officially entered the downloadable casual games market (offering games for $9.99 or less), those questions were on the minds of many who follow the industry.

That was part of my impetus for seeking out Alex St. John, the co-founder and executive chairman of Redmond, WA-based WildTangent, and one of the most prominent gaming experts in the Seattle area. Not surprisingly, St. John had many provocative things to say, not just about Amazon but also about how the casual games business is evolving—and what companies need to do to stay ahead of the curve.

First, some context. St. John is an ex-Microsoftie who started WildTangent back in 1998. Last October, he stepped down as CEO but remains at the company. St. John says the downloadable casual games industry as we know it emerged during the last recession, in 2001-2002. Big companies like Microsoft, Yahoo, and AOL got heavily into casual gaming around five years ago, but have since stagnated or declined in that market—being displaced by smaller and more nimble game distributors and networks like WildTangent.

By comparison, Amazon entering the space may not be that big a deal. “Amazon is smaller than other players out there,” St. John says. “There’s nothing new or dramatic about the offering. Nothing bigger than Microsoft, Yahoo, or AOL.” The limiting factor, he says, is how the games are being sold. “What Amazon launched is a last-generation business model…They came to the party a little late, and the offering is generic. But they’re Amazon— they’ll sell some games.”

Amazon, which acquired casual-game developer Reflexive Entertainment back in October, undoubtedly has a different take. “Certainly there is a lot of competition, and a lot of sites out there that … Next Page »

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