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What Sony’s $380M purchase of Gaikai means for future gaming hardware

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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 (s MSFT) 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 (s qcom) , NEA and Intel Capital (s intc).

5 Responses to “What Sony’s $380M purchase of Gaikai means for future gaming hardware”

  1. bunsen

    Comments should be disabled for gaming-related articles because they always provoke the same idiotic nonsense and trolling by the most immature gamers.

  2. Richard

    Knowing $ony, their crappy PSN and the current state of the internet worldwide, this will fail miserably! As long as Dave Perry acquires the money, he will be home free.
    Cloud gaming may have a future, but it will take years before broadband penetration is high enough for this to make a dent in the current strategy and Sony fails at everything they do, so don’t expect this from them.

  3. Hi,

    Congratulations to Dave Perry; He’s done an amazing job from conception to the Beta that I’ve been following from the start and occasionally been trying.

    If he can stay within Sony and continue driving Gaikai, then I don’t think there’ll be too much of a problem; Sony also own Gracenote which is also used by competitors.

    There’s also no fear of concepts of DRM, as this is all about thin-client streaming, just the image, not the processing beyond a low base spec, which most modern TV’s can handle.

    I do just hope it continues as a parallel service, available everywhere (non-Sony), Tv, etc., while the potential remains for extending the lifespan of the existing hardware, and thereby reducing the costs of a lighter/”thinner” PS3 model, and even using low-latency Xperia handsets connected by hdmi to TV’s to still provide full-spec games but accessed as if mobile apps => My vision from the early-90’s envisioned!!!

    Yours kindly,

    Shakir Razak

  4. Reblogged this on Nii-Teiko and commented:
    this is interesting. why?

    well…as much as I am aware of the importance of The Cloud in terms of scalability regarding cost, audience and infrastructure it still seemed like somehing far off, something not as serious…yet

    this purchase means that it is the real deal in terms of actually delivering a product. the article also goes into a bit of detail in how this may affect future products like a 4th generation Playstation. is the delivery infrastructure up to scratch though? here in the Uk, bandwidth is a joke with a majority of ISP’s

    see what you think

    The Almighty’s Blessings

  5. ricdesan

    Translation; This is another train wreck Sony is planning in order to kill more of its brand and take down innovative companies with it.

    They will not only hobble the perception of cloud gaming in a way that most people cant even conceive of, but they will also DRM it up SO bad that it will set back the consumer perception of cloud computing a few years at least.

    If blizzard can fuck up Diablo 3 login and server based gaming the way they did with that title, imagine what Sony will do.