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How Amazon is coming for the gaming industry

Yahoo Finance’s Dan Howley joins Zack Guzman to discuss Amazon’s latest push into the gaming industry after acquiring Twitch back in 2014.

Video Transcript

ZACK GUZMAN: Welcome back to live coverage here on Yahoo Finance. As we were talking about, to kick off the show today, tech stocks have maintained their performance this year despite all of the uncertainties and question marks thrown at investors around the coronavirus pandemic. When you look at it right now, the FAANG names, Amazon neck and neck with Netflix, advancing about 32% year to date.

Of course, yeah, that company does have the benefit Amazon does of their cloud business, but it also has another secret weapon as the gaming industry catches fire here, as we approach the midway point in 2020. That would be Amazon's Twitch, as more and more people tune in to watch gamers play. For more on that, I want to get to Yahoo Finance Tech Reporter Dan Howley, who has more on the way that Amazon has been able to focus on Twitch. Dan?

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DAN HOWLEY: Yeah. So what Amazon is basically doing is using Twitch as a platform that other game companies can use to seed their games to Twitch streamers, which is essentially a form of free advertising that then can be used by those other companies to leverage sales. And that's something that Amazon has been doing for some time.

But they also recently announced their new game, "Crucible," and that just launched on Tuesday. And that's Amazon's first real foray into blockbuster gaming territory. They're going to be taking on the likes of Microsoft, Sony, Nintendo, any of the big names that you can think of, as well as third-party studios. That's what Amazon is trying to do.

And they want to eventually be the pipes that you get your gaming through via cloud gaming. This is something that we've been talking about in the gaming industry for some time. Right now, Google is the only major vendor with a cloud gaming solution via its Stadia service, and, frankly, it's not very good. There's not a good gaming catalog there. There's not a lot to draw in gamers.

When it launched in November, there was supposed to be a free tier. That didn't launch until last month. So obviously, a lot going on there that's not available quite yet, and gamers haven't been taking up that kind of service quite yet.

If you go into a game and try to play a public online game with people, you're not going to find a lot of folks gaming with you. There was a report where someone went in and tried to play a game of-- this game, "PlayerUnknown's Battleground," and was only playing with computer players, not actual players.

But Amazon wants to turn that on its head. They have the pipes, they have their AWS service, and they're launching into gaming with their "Crucible" game. They're going to have another game coming in August. And if all that works out, this new project they're working on, Project Tempo, could be huge for them.

ZACK GUZMAN: Yeah. I mean, you talk about only playing with computer games. It reminds me of my quarantine weekends here, Howley.

But when we look at all the names in the FAANG space, now basically trying to attack the gaming space. You got Amazon and Twitch. You got Microsoft and Mixer. But as you mentioned, Stadia approaching its half-year birthday here since that was launched. I mean, it doesn't sound like you're a big fan, but would you say, at least relatively, Amazon's still far in the lead in terms of how much importance they're putting on the gaming industry?

DAN HOWLEY: I would say they're putting a lot into it. You know, one of the titles that they have for one of their publishing arms is Relentless, and that's something that Jeff Bezos originally wanted to name Amazon. That domain is registered for Amazon right now, relentless.com, it has been for some time.

And I think for something like Amazon to jump into gaming is going to take a lot. I think the real front runner here in this next generation that we'll see of gaming, this cloud gaming revolution, will be Microsoft. They also have the pipes needed to make sure that when you play on a cloud platform, there's no lag. Remember, if you press a button and the character on the screen doesn't move, that's a terrible experience.

So what you need to make sure is that you have enough servers around the world to handle that. Microsoft-- more than able to do that, and they also have the gaming pedigree with their Xbox line, their first-party software offerings, and existing industry relationships. Amazon doesn't have any of that, so they're really up against it. But, you know, never, ever, ever count out Jeff Bezos and company.

ZACK GUZMAN: All right, there you go-- latest on the gaming front with Dan Howley. Appreciate that.