Game On, Amazon

You can check off video games as the next item on Amazon.com's (Nasdaq: AMZN  ) quest to create digital-distribution alternatives to its most popular storefront categories. The company is acquiring Reflexive, an online seller of PC and Mac game downloads.

Reflexive has deals in place for more than 1,100 premium games in its arsenal, and dozens of free Web games as ideal gateway drugs. The company also offers an attractive value proposition to diehard gamers, since it doesn't limit the number of times you can install a game once you've purchased it.

Reflexive is a nice catch for Amazon. It also fits right in with the company's recent push toward providing digital solutions to the products it also sells in the physical world:

  • Its breakthrough Kindle is enhanced by its ever-widening library of available e-books.
  • Taking on Apple's (Nasdaq: AAPL  ) iTunes juggernaut, Amazon offers MP3 downloads with no copy-protection restrictions.
  • Amazon also sells digital video, even directly into TiVo (Nasdaq: TIVO  ) DVRs.     

With Amazon diving digitally into all of its old-school media platforms, it was really just a matter of time before computer games joined the mix. Console games would be a bigger catch, but the console makers themselves, like Microsoft (Nasdaq: MSFT  ) with its Xbox Live Marketplace and Nintendo (OTC BB: NTDOY.PK) with its Wii Store, are pretty much cornering that market. Computer games offer a more open opportunity, and Amazon's been smart enough to acquire an established player instead of starting from scratch.

The actual terms of the deal are not being made public, but it's unlikely to break the bank at Amazon. The buyout is also a great move for Reflexive; the digital store will now reach a wider audience, especially as Amazon markets the service to customers who buy other computer games -- or even new computers.

Well played, Amazon. Now show the physical distribution model some love, and go buy Gamefly, too.

Other chapters in Amazon's ongoing story:

Microsoft is a Motley Fool Inside Value recommendation. Nintendo, Apple, and Amazon.com are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters services free for 30 days.

Longtime Fool contributor Rick Munarriz wonders whether Amazon will find a way to digitally deliver gourmet foods and lawn furniture, too. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story, save for TiVo. The Fool's disclosure policy is eligible for free Super Saver Shipping.


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