Amazon retreats from gaming: Why is the $4 trillion tech giant scaling back its game division?

Amazon, a company that wields immense influence across the global IT market from online shopping to cloud services, streaming, and logistics, appears to be strategically withdrawing from the video game sector. Despite once reaching a market value of $3 trillion (approximately 4,000 trillion Korean Won), Amazon's gaming division has consistently failed to deliver standout results.

Recent moves indicate a significant scaling back. In early August, Amazon Games announced that Smilegate RPG would resume direct publishing of its MMORPG 'Lost Ark' in Western markets starting in early 2027. Similarly, NCSoft's 'Throne and Liberty' (TL) will have its Western live operations managed by First Spark Games and NCSoft from late 2026. These titles represented a substantial portion of Amazon Games' revenue, making their departure a de facto withdrawal from these key services.

This retreat follows a period of substantial investment and ambition. In the mid-2010s, Amazon aggressively pursued a larger role in gaming, acquiring Double Helix Games in 2014 and the streaming platform Twitch for $970 million. The company also revealed plans to build its own gaming ecosystem using its proprietary Lumberyard game engine and AWS cloud services. Amazon unveiled three major new titles, 'Breakaway,' 'Crucible,' and 'New World', at TwitchCon in 2016. It also invested heavily in marketing for its publishing deals with NCSoft's 'TL' and Smilegate's 'Lost Ark,' gaining considerable popularity.

However, the outcomes fell far short of expectations. 'Crucible,' a highly anticipated AAA shooter released in 2020, received harsh criticism and was moved back to a closed beta within a month of its official launch, ultimately ceasing development just five months later. 'New World,' another internally developed and published title, initially achieved success with over 900,000 concurrent players on Steam shortly after launch, ranking among the top concurrent player counts in Steam's history. However, content shortages and numerous bugs led to its decline, with content development scheduled to end in 2025.

Even the acquisition of Twitch, while successful in terms of user base and influence, has struggled with profitability. In January 2024, Twitch CEO Dan Clancy admitted the platform was not generating profit. Reports from 2021 indicated that Amazon's gaming division was spending approximately $500 million annually on large-scale game development, yet the returns were minimal. This financial underperformance, coupled with a broader company-wide restructuring and a significant pivot towards artificial intelligence, has led to the current downsizing. Amazon is channeling massive capital into AI infrastructure, including AWS data centers, AI chips like 'Trainium,' and investments in AI startups, signaling a clear strategic shift away from its ambitious gaming endeavors.