Amazon Enables Microtransactions Through In-App Purchases in Video Games

Internet retail giant Amazon (Nasdaq: AMZN) has expanded its digital services into the realm of microtransactions for video games downloaded from the Amazon Digital Games Store.

Players now can use their Amazon accounts for in-app purchases of virtual goods or currency on any title available through the company’s app store, the Seattle-based company announced Wednesday in a press release.

The feature was already available for mobile users through the Amazon Appstore on Android and Kindle Fire devices, but Amazon Games Director Mike Frazzini said the update expands the service beyond mobile platforms into PC, Mac, and browser-based titles.

“Game developers build games that are used across multiple platforms and mediums. In-App Purchasing for Mac, PC and Web-based games is our latest service that helps game developers grow their business and increase their customer base,” Frazzini said in a statement.

Given the trend towards cross-platform, cloud-based gaming that is being championed by industry stalwarts like Nvidia (Nasdaq: NVDA), Amazon’s move could be seen as purely a matter of convenience. But the real promise of Amazon supporting in-app purchases like this stems from the design and development decisions that it might inspire in game studios themselves.

Microtransactions are a common feature that free-to-play game developers employ to monetize their user base. And if studies like Flurry's recent report that 80 percent of the $10 billion mobile app market came from smartphone games are to be trusted, then there's more than enough merit to pursuing this business strategy. But few companies with Amazon’s level of clout and experience in the realm of digital publishing have ventured into the space. While Google (Nasdaq: GOOG) can offer Android users looking to spend a few bucks on “Temple Run” or “Angry Birds” a chance to do so with their Google Wallet mobile payment system, it’s hard to find an e-commerce brand as respected as Amazon.

The average Zynga (Nasdaq: ZNGA) fan would probably feel more comfortable passing their credit card information through Amazon’s payment system than some native feature in “Zynga Poker,” for instance. And this can only mean more opportunities for monetization as the barriers to entry for in-app purchasing erode.

“We were excited to work with Amazon on integrating In-App Purchasing into 'Forsaken Planet,'” David Sterling, vice president of Sony DADC's LOOT Entertainment, said in a statement. “Giving gamers the option to buy in-game goods using their Amazon account makes it easier for them to get what they want without ever having to leave the game environment.”

Indeed, in Amazon’s own words, the new mobile payment system seems intended to inspire new content developed exclusively for the Amazon games store, perhaps positioning the company as a competitor to Valve’s Steam service in the future. In its statement to developers, Amazon said studios will receive 70 percent of all proceeds from in-app purchases.

Amazon shares closed at $268.11 Wednesday, down $2.08 (.77 percent).