Why Goliaths like Amazon lose to Steam: "We never validated our core assumptions before investing heavily in solutions"
Every once in a while, a large company comes up with a new way to disrupt Steam’s dominance in the PC game distribution. Most rival stores and solutions tend to fade into oblivion, while Valve’s platform only gets bigger and better. But why?
Last week, former Amazon executive Ethan Evans took to LinkedIn to recall the company’s attempts to “disrupt the game platform Steam” (thanks, GameDiscoverCo). Here are the key takeaways from his post.
Evans, who worked at Amazon for more than 15 years and served as VP of Prime Gaming between May 2019 and September 2020, highlighted three waves of the company’s expansion into game distribution:
- In 2008, Amazon acquired developer Reflexive Entertainment, which also sold casual games through its own small store: the idea was to scale this distribution network using Amazon’s resources, but it “went nowhere”;
- In 2017, Amazon launched the Twitch Game Store to distribute titles for PC using the power and user base of its live streaming services: the company’s wrong assumption was that gamers “would naturally buy from us because they were already using Twitch”;
- In 2020, Amazon soft-launched cloud gaming platform Luna to challenge Steam in a different area: Google made a similar attempt with its failed service Stadia, with Evans saying that the “whole time, Steam dominated despite being a relatively small company (compared to Amazon and Google).”
According to Evans, Amazon underestimated what made customers use Valve’s platform: “It was a store, a social network, a library, and a trophy case all in one. And it worked well.” One of the biggest mistakes was that the company tried to build products without validating its assumptions and studying how the new services would be better than Steam.
At Amazon, we assumed that size and visibility would be enough to attract customers, but we underestimated the power of existing user habits. We never validated our core assumptions before investing heavily in solutions. The truth is that gamers already had the solution to their problems, and they weren't going to switch platforms just because a new one was available. Former VP of Amazon Prime Gaming
“Just because you are big enough to build something doesn’t mean people will use it,” Evans concluded. He also shared advice for scaling a product that competes with already established and strong ones: “talk to real customers before writing code” and “test assumptions, not features.”