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Amazon To Develop New Video Game Hardware, Streaming Game Service And First PC Game?

Amazon To Develop New Video Game Hardware, Streaming Game Service And First PC Game?
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Amazon Could Soon See Sustained Revenue Surge (GuruFocus), Inc. (NASDAQ: AMZN) could be preparing for its next move in game development.

The dot-com giant is reportedly hiring developers to work on its first PC game. The company may also be working on a streaming game service.

"I believe that Amazon wants to be on the cutting edge of wherever content is – content distribution and creation," Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, told Benzinga. "In games, the next frontier is really streaming."

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Latency is a big problem for streaming game services, but Moorhead said this area has improved dramatically.

"In games, if you have latency…it's gonna be a horrible experience," he said. "You have to have servers with content in the city to be able to do that effectively. I would expect them, at some point, to get into some type of streaming game [service]."

The rumors might be a little shortsighted, however. Wedbush analyst Michael Pachter pointed out that Amazon announced exclusive Fire TV support for GameFly's streaming game service last week.

"It's hard to keep up with their millions of press releases," Pachter told Benzinga.

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'In Denial'

Regardless of Amazon's plans, Moorhead said that triple-A game producers and publishers are "in denial" about streaming video games.

"[They're] in a very similar situation that music and movies and TV was [in] that they don't want to change the good deals they have going," said Moorhead. "When you have revenues of a billion dollars on a triple-A game, you're not going to change your ways."

Numerous franchises have earned billions of dollars for game publishers, including "Grand Theft Auto" from Take-Two Interactive Software, Inc. (NASDAQ: TTWO) and "Call of Duty" from Activision Blizzard, Inc. (NASDAQ: ATVI).

"Until there's that major disruption, or the [publishers] can figure out how to make more money than they are today, I don't see it radically changing," Moorhead added.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

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