PlayStation to the Cloud: Sony acquires cloud-streaming gaming company Gaikai

Sony and Gaikai are the wiliest devils there are! Ahead of E3 2012, rumors swirled every which way that Sony was going to purchase the cloud gaming service and would announce its entry into the streaming gaming market at the conference. E3 came and went with nary a peep out of Sony or Gaikai, and following the event Gaikai flatly denied that it was considering a sale to Sony.

Gaikai head David Perry’s protestations were simply classic misdirection: Sony purchased Gaikai on Saturday for $380 million. The purchase has the potential to fundamentally alter the game console business and the PlayStation brand as its been known for the past 18 years.

In a press release sent on Saturday, Sony Computer Entertainment CEO Andrew House said, By combining Gaikai’s resources including its technological strength and engineering talent with SCE’s extensive game platform knowledge and experience, SCE will provide users with unparalleled cloud entertainment experiences. SCE will deliver a world-class cloud-streaming service that allows users to instantly enjoy a broad array of content ranging from immersive core games with rich graphics to casual content anytime on a variety of Internet-connected devices.”

House’s comments confirm that Sony will be the first console maker to enter the cloud gaming arena, beating the typically service-savvy Microsoft to the punch. Sony’s PlayStation 3 console isn’t named directly in the press release, which means that the Sony-branded version of Gaikai’s service may skip this console generation and debut alongside the PlayStation 4, or PlayStation Orbis as its sometimes called. Core gaming, Gaikai and Sony’s stock in trade in the broader video game industry, is front and center in the announcement though, which means Sony’s ambition is to bring cloud gaming into its console business. Gaikai’s infrastructure may also work as vital glue for Sony’s disparate digital services, including mobile gaming with PlayStation Mobile, music through Sony Music Unlimited, and others.

What will Sony offer first? Rumor is that Sony will offer PlayStation and PlayStation 2 classics for streaming soon, but House’s comments about rich graphics certainly imply that Sony will offer much more than legacy titles.

Even though Gaikai said it wouldn’t sell to Sony, it was expected to sell to someone soon. CNN reported on Jun. 22 that Gaikai was looking for a buyer to pay $500 million. Sony came close to that price, but did come in well under.

Sony is aggressively moving away from retail sales models. The PlayStation Vita, while not successful yet, is an impressive device from the company chiefly because it’s the first machine from Sony that makes digital and retail distribution equal. Now Sony is banking on console gaming as a service, not as a retail business at all. All it has to do now is deliver a service of quality.

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