Hello, and welcome to Protocol Entertainment, your guide to the business of the gaming and media industries. This Tuesday, we’re looking at where Amazon Games chief Christoph Hartmann thinks the industry is headed, how developers are responding to the war in Ukraine, and how Halo studio 343 Industries is struggling to maintain the sci-fi shooter’s post-launch roadmap.

For Amazon, the future of the gaming is games that never end

Unlike its peers in the tech industry, Amazon can say with confidence it knows the recipe to a successful modern video game. The company tried and failed, rather publicly, to make its own games for years, releasing and then canceling a competitive title called Crucible and shutting down a Lord of the Rings game.

But now, Amazon has not one, but two successful video games under its belt: New World, a fantasy role-playing MMO, and Lost Ark, a South Korean MMO from developer Smilegate that Amazon helped localize and publish for North America and Europe. Amazon Games chief Christoph Hartmann told me the takeaway from these successes is the promise of the live service model, which he sees as the future of the industry.

New World and Lost Ark buck industry trends. The MMO genre has long been dominated by two games: Blizzard’s World of Warcraft and Square Enix’s Final Fantasy XIV. The former is nearly 20 years old, and the latter was released nine years ago. That made the MMO genre a good candidate, according to Hartmann.

• “From what I have learned through all the years is to do the opposite from what everyone else is doing, because there's just going to be too many players,” he said.
• Hartmann founded the 2K Games publishing label under Take-Two Interactive, helping oversee the launch of games like Insomniac's Bioshock and Gearbox’s Borderlands. He joined Amazon, he said, because he wanted to work on this type of gaming.
• “The reason I left the label I founded and went to Amazon is because I want to do live service games. Because I actually believe it’s the future,” he said. “It is very hard to do single-player games that have a high chance of commercial success because the production costs, as we know, with every generation of consoles or PCs, goes higher and higher.”

The live service model has had a bumpy road. Many early MMOs helped popularize the live service model by charging monthly subscription fees to access the game on an ongoing basis. Over the years, however, the approach began to shift, influenced by the success of mobile games and free-to-play.

• Many live service games today are free to play and sustained through a mix of microtransaction strategies, including some unsavory tactics like pay-to-win and loot boxes. Some developers have found a perfect balance between steadily rolling out free updates, designing seasonal battle pass subscriptions and releasing timely and affordable cosmetics.
• Fortnite is the industry leader in this regard. But many companies, including major publishers like EA and Ubisoft, have tried charging full price for games while also trying to turn a profit through microtransactions, leading to severe player backlash and a poor reputation for the games-as-a-service approach.
• Studios are now trying to adjust. Activision Blizzard is pausing next year’s annual Call of Duty installment, and Ubisoft is rethinking how it designs Assassin’s Creed games.
• Sony purchased Destiny developer Bungie for $3.6 billion and hopes to use its talent and technology to release as many as 10 live service games by 2026.

Amazon has found its niche. Hartmann said the company has finally found its footing with New World and Lost Ark, one of which is paid and the other a free-to-play game, but both live service titles. Now it wants to develop more games of its own and publish more titles from third parties.

• Hartmann said Amazon Games wants to expand its publishing efforts to find up-and-coming developers working on ambitious projects, ones that could force the rest of the industry to take notice and potentially copy.
• “We also want to be — I don't even want to call it a publisher — want to be a home for young, innovative developers,” he said. He pointed to Amazon’s resources, both in the form of marketing with Twitch and in its vast cloud computing platform. “We have the flywheel to help them to press this speed dial to get to success quicker.”
• Hartmann said Amazon is looking to build “long-term relationships” that might result in, say, an acquisition or a multiyear publishing deal. “It's still a very selective process,” he said. “I only want to sign up something I truly feel could be something big and very special.”

Amazon’s commitment to gaming is long term, Hartmann said. The company sees gaming as a central pillar to the entertainment industry, especially now that video game-based film and TV has started picking up serious steam in Hollywood. Just yesterday, a Deadline report said Amazon is in talks with Sony to adapt its God of War franchise into a Prime Video TV series.

Hartmann said a central ethos to Amazon Games is learning to fail and learning from those failures. “Even if one of those games doesn't at the beginning do as well as we want, one thing I always told myself is we want to follow the Amazon DNA … We're not throwing in the towel just because we didn't didn't turn a profit in the first 24 hours,” he said. “If you believe in it, keep on going, learn from it. Especially with us being committed to live service games, sometimes it takes a while for them to nurture.”

— Nick Statt