In the highly competitive video game sector, Amazon.com Inc. (Nasdaq: AMZN) is hoping to leave its mark now that it owns gaming studio Double Helix Games LLC.
The Double Helix transaction comes at a time when many gaming companies are retooling and wielding M&A as a way to stay ahead of competition. For example, Zynga Inc. (Nasdaq: ZNGA), known for its “FarmVille” and casino-style games, recently agreed to buy U.K.-based NaturalMotion Ltd. for $391 million in cash.
In November, Apple Inc. (Nasdaq: AAPL) agreed to buy Israeli 3D sensor market leader Primesense for $360 million as a way to make inroads to the gaming sector, specifically for its Apple TV product. Primesense is best known as the technology behind Microsoft’s popular Kinect motion sensing device that has contributed to the success of the Xbox.
With Amazon, there is a much larger strategy, one where the company looks to invest millions in creating its own programs as part of a strategy to challenge mainstream broadcasters and rival Netflix Inc. (Nasdaq: NFLX). Double Helix, for its part, is meant to bolster Amazon’s goal of producing its own gaming console. Amazon’s web TV set-top box would compete with Nintendo Co. Ltd. (TYO:7974), Sony Corp. (NYSE: SNE), maker of PlayStation, and Microsoft Inc.’s (Nasdaq: MSFT) Xbox.
Irvine, Calif.-based Double Helix is known for the game “Killer Instinct,” as well as various titles based on film franchises like “G.I. Joe” and “Green Lantern.” Under its previous name, Shiny Entertainment, it developed games based on “Star Wars” and “Indiana Jones.”
The company was founded in 2007 after the merger of Shiny Entertainment with game developer The Collective Inc. (In 2002, Shiny Entertainment was sold by Interplay Entertainment Corp. to Infogames SA for $48 million.)
Amazon bought Double Helix as part of the company’s “ongoing commitment to build innovative games for customers,” the company says. The Double Helix deal should bring a slate of intellectual property assets to Amazon as well as new talent. Double Helix employs roughly 75 people and will continue to operate out of its current office.
At the same time, the studio will be folded into Amazon Game Studios, which has been known to produce casual games, but has yet to gain traction with a hit.
In 2012, Amazon launched its first mobile game, an aerial combat title called “Air Patriots.” Before that, it released a game titled “Living Classics,” playable on Facebook Inc. (Nasdaq: FB). Buying an experienced development studio such as Double Helix position it to finally make its mark.