Will Amazon take over gaming? They might be one step further with this partnership deal
If you’re American, you may remember the days, five or six years ago, when Netflix sent you DVDs in the mail while the selection of streaming films you could watch was limited. Now it’s the opposite. Most movies on their site can be streamed and only 6 million people still get the films by mail.
Believe it or not, most video game rental services still work that way: They send subscribers games in the mail. That’s because high-end video games generally take more bandwidth than a movie.
Today, one of the leading video game rental services in the United States, GameFly, Inc. announced it will introduce a video game streaming service through a merger with Playcast Media Systems, Ltd., an Israel-based cloud gaming platform company.
A recent Bloomberg article describes how six years ago, a San Francisco startup called OnLive tried to introduce video game streaming but failed. But the time may be ripe now because servers and Internet speeds are increasing.
“For the first time, the infrastructure is in place to support streaming video games,” the two companies said in a joint press release. “Nearly 80 percent of Americans now have access to high speed broadband, a majority of households have internet enabled TVs, and by 2017 there will be more than 200 million total streaming equipped devices in households.”
“The $25 billion video game industry is undergoing major disruption and consumers have expressed strong interest in streaming games, much as they do with TV and movies,” said Michael Moritz, Chairman of Sequoia Capital and GameFly Director. “GameFly’s introduction of its new streaming video game service should help accelerate the growth of this market considerably.”
Amazon Fire TV will have exclusive access to this cloud gaming technology
GameFly also announced that Amazon Fire TV will be the exclusive streaming media device for its new service at launch. Game packs start at $6.99 a month and at launch, customers can choose from six gaming packs.
“We’re excited to offer the GameFly streaming service worldwide with Playcast’s market ready and scalable technology,” said David Hodess, CEO of GameFly.
“This represents the perfect evolution of GameFly by extending its mission of providing the highest quality video games available to gamers however they want to play. We are also very pleased to launch on Amazon Fire TV and make the service available to U.S. consumers.”
Playcast’s Israeli shareholders include Jerusalem Venture Partners, Mer Group and Xenia. Gadi Tirosh from JVP and Bret Maxwell from MK Capital will join the GameFly Board of Directors. “GameFly is the perfect company to join forces with and bring our game streaming technology to gamers around the world,” said Tirosh.
“They are the leaders in video game subscription services and bring an established brand, strong publisher relationships and financial resources,” Tirosh added.
PlayCast’s R&D center will stay in Israel. In fact, GameFly will be expanding Playcast’s R&D center in Caesarea, the company stated.
The two most interesting aspects of this announcement
First, Israel has not had a lot of successful gaming startups. Most of the high profile tech coming out of Israel is utility oriented, such as Waze and Wix, ad tech startups like Matomy, Outbrain, and Taboola, or the plethora of Israeli cyber security startups, such as behemoths like CheckPoint. While Israel has had some successful casino related startups, such as Playtika, Playcast is one of the first successful gaming companies to emerge from Israel.
The fact that Playcast’s technology is being used by Amazon also increases Amazon’s hold on video and gaming content. Since Amazon’s acquisition of Twitch last year for almost $1 billion, Amazon has surprised Google, Apple, and Microsoft with its strong pivot into online video streaming. Twitch also greatly increased Amazon’s customer advantage with gamers, so Playcast’s cloud technology could help Apple further penetrate this market. With cloud gaming services such as Sony’s PlayStation Now on the rise, Amazon’s strategy could work and help it rebound from its disaster of a smartphone.
Laura Rosbrow contributed reporting.
Featured Image Credit: Playcast