Sony Computer Entertainment has been known for its iconic PlayStation hardware, including the PS3 console the PlayStation Portable, now called Vita. But does its future lie in proprietary hardware, or in a delivery platform that brings PlayStation games to any connected device? That’s one possible implication of a $380 million acquisition of Gaikai, a Silicon Valley provider of gaming delivered through the cloud.
Sony announced the news early this morning, saying it was planning on building a cloud service that provided users with new gaming experiences. There were rumors in May that Sony was interested in working with Gaikai or its rival OnLive. Last month, Fortune reported that Gaikai was looking to sell for $500 million. Now that Sony has followed through and bought Gaikai, it raises some interesting questions about what its hardware future looks like.
Initially, the cloud service could quickly be integrated into the PlayStation 3, its successor the PS4 and the Vita, allowing users to access games without a download. Users could access, for example, older PS1 or PS2 titles from the console and the Vita handheld device. But the purchase of Gaikai could also alter Sony’s future hardware plans, putting less emphasis on powerful systems and more focus on a cloud platform that could bring PlayStation games to a wide array of devices. It could be Sony’s equivalent of “TV Everywhere”: Gaikai could connect to Sony smartphones and other mobile devices including tablets, and it could power gaming for a lot of TV makers.
Gaikai already has deals to bring gaming to TVs from Samsung and LG. It’s unclear how those deals will work now that Gaikai is owned by a rival. We’ll have to wait for more details from Sony and Gaikai, but the potential exists for Sony to depend less on big consoles and all the costs those incur. Having Gaikai means that the PS4 and the Vita would not have to be followed so closely — if ever — by another piece of console hardware.
That would be a big shift for Sony, which has traditionally invested in some of the most advanced gaming systems. The PlayStation 3, for example, was incredibly robust with its Cell Processor but the high specs came with $600 price tag and also took longer to hit the market. That ultimately hurt sales and forced Sony to play catch up against Microsoft’s earlier-to-market Xbox 360. Now, Sony can start to contemplate a future in which it doesn’t get hung up on those issues. Users could play the latest games from Sony’s data center with the titles streamed instantly to users. That’s the promise of cloud computing in which most of the heavy lifting happens in a data center.
The deal will no doubt heat up speculation about OnLive, which is also rumored to be an acquisition target. Gaikai had raised $45 million from Benchmark Capital, TriplePoint Capital, Rustic Canyon Partners, Limelight Networks, Qualcomm Ventures , NEA and Intel Capital.