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Sony acquires Gaikai for $380 million

Sony acquires Gaikai for $380 million

Mon 02 Jul 2012 7:21am GMT / 3:21am EDT / 12:21am PDT
HardwarePublishing

SCE splashes out on cloud gaming service

SCE

Sony Computer Entertainment

Sony Computer Entertainment is a Japanese videogame company specialising in a variety of areas in the...

playstation.com

Sony Computer Entertainment has bought cloud gaming company Gaikai for $380 million, offering speculators a clue as to its plans for future gaming machines.

"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," said SCE president Andrew House.

"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, anywhere on a variety of internet-connected devices."

GamesIndustry International had heard talk of the deal on June 1, but the rumours were brushed off by both companies at that early stage.

In the past Gaikai has partnered with a number of big companies like Samsung and WikiPad, and its service has been used to host games from EA and Ubisoft.

"SCE has built an incredible brand with PlayStation and has earned the respect of countless millions of gamers worldwide," added Gaikai CEO David Perry.

"We're honoured to be able to help SCE rapidly harness the power of the interactive cloud and to continue to grow their ecosystem, to empower developers with new capabilities, to dramatically improve the reach of exciting content and to bring breathtaking new experiences to users worldwide."

At the end of last month their were rumours that Gaikai was looking for a buyer, while Perry told GamesIndustry International the service was an obvious choice for acquisition.

"When you think about the big picture, which company wouldn't want to partner or own a company like Gaikai?"

20 Comments

Terence Gage Freelance writer

1,288 120 0.1
An interesting move on Sony's part. I wonder if there was much competition - considering the financial situation Sony is in at the moment, they're obviously not scared about making big acquisitions to aid the long-term health of the company (i.e. Sony Ericsson as well).

Good luck to both of them, I guess. As a PS+ subscriber, I'd like, for example, the option to be able to stream demos before or instead of downloading them. Maybe in the longer-longer term they're considering whether traditional console hardware will become obsolete with the likes of playing through tablets or Smart TVs coming to the fore. Take it away Bruce and tell us what you think...

Posted:2 years ago

#1

Antony Carter Senior Programmer, Epic Games

85 47 0.6
If this is the future of gaming, then Sony got themselves a bargain, as they more than likely got very lucrative patents along with this cloud based infrastructure.

Posted:2 years ago

#2

Nick Parker Consultant

287 156 0.5
#Antony Carter I agree Antony, Sony have got themselves a bargain. Gaikai could have waited for longer term enhanced value but it seems, it may have run out of cash rather than have created a get rich quick scheme for the shareholders. With significant sums required to build such an infrastructure, VC injections of $10 million here and $10 million there are not enough to sustain the business model at this stage. Gaikai wanted $500m, they achieved a $380m close; as the best of the current bunch of commercialised streaming solutions (and my preferred b2b route), it's the first indication of the market value of such ventures.

As for Sony, I doubt this will be the only streaming acquisition; it has wide long term strategic aspirations for digital distribution, not just for games but for the whole content eco-system it owns. Consoles will become extinct and smaller local clients will suck up cloud delivered content.

Posted:2 years ago

#3

Tameem Antoniades Creative Director & Co-founder, Ninja Theory Ltd

196 164 0.8
Good move Sony

Posted:2 years ago

#4
I'm delighted that GaiKai's investors have secured this exit, but I don't hold to the idea that this is a great price for Sony.

GaiKai's public offering has been very much focused on video streaming of games hosted on servers. Those are PC games- so we may find an interesting dynamic where Sony are pushing the development of new PC titles!

I suspect part of the reason that GaiKai's business model in the near term has shifted to trials of games revolves around the economics of serving the games- probably somewhere over $1/hr for 720p, twice that at 1080p.

This makes more sense if the PS4 does prove to be much closer to PC architecture...

What may be more important are the relative patent portfolios of the various protagonists... AFAIK these haven't been tested in court, but each player makes bold claims.

So is it worth $380m?

Posted:2 years ago

#5

Ben Furneaux Designer, Turbulenz Limited

116 55 0.5


Future Sony TVs, tablets and phones will be bundled with a killer eco-system.

Posted:2 years ago

#6
This has been a very clever move from Sony. Very , very clever... It seems Hirai knows perfectly the battlefield where Sony is fighting...

Posted:2 years ago

#7

Kingman Cheng Illustrator and Animator

954 182 0.2
Exciting times for Sony! Be interesting to see Microsoft respond to this.

Posted:2 years ago

#8
It is definitely a good asset for Sony to pick up but I'm not sure I agree with the various "bargain" statements.

There are now well over a dozen companies with comparable technology, all facing the same economic and technical scalability problems and many of them struggling to generate material commercial returns. Sony undoubtedly could have acquired similar technology for a small fraction of Gaikai's cost.

Gaikai undoubtedly has a material revenue stream now but how many of those customers will be retained post acquisition? If Gaikai had a load of patents then the price would be more understandable but I dont believe they have more than a single patent pending in the US. OnLive in contrast have a shed load of patents pending although with both you have to remember that there were companies (such as G-Cluster) doing video-stream based games on demand years before Gaikai and even OnLive were founded.

Posted:2 years ago

#9

Nick Parker Consultant

287 156 0.5
#Nick Gibson. I agree there are comparable technologies but how many with the degree of server infrastructure reach which Gaikai and OnLive own? Sony has infrastructure to support PSN for example but would that same backbone be able to serve up streamed demos or even whole games which is a different level all together?

Posted:2 years ago

#10

Wesley Williams Quality Assurance

133 72 0.5
I always expected Microsoft and OnLive to marry up first and I wonder if this decision by Sony will lead to that.

Posted:2 years ago

#11

Patrick Frost QA Project Monitor

400 196 0.5
I'm liking the look of this a lot. The thing I find most interesting is what Sony can do for streamed gaming. Personally, I've been enjoying OnLive a lot but it always felt like it needed that extra bit of oomph to make it truly mainstream.

Best of luck to all involved!

Posted:2 years ago

#12

Harrison Smith Studying Games and Graphics Programming, Royal Melbourne Institute of Technology

75 4 0.1
Microsoft has already invested billions of dollars in their own cloud services and the person heading that up has already said that xbox is going to play a big part in that investment, MS wont buy Onlive or any other cloud service when they already have their own

Edited 1 times. Last edit by Harrison Smith on 2nd July 2012 1:01pm

Posted:2 years ago

#13
@NP. Sure they are larger operations but is their back-end system worth $380m today when the real commercial opportunity is many years away? The alternative use of that capital is to buy a cheaper supplier and invest in scaling the infrastructure over the next 3-5 years to match the commercial opportunity as it grows.

Posted:2 years ago

#14

Klaus Preisinger Freelance Writing

1,131 1,162 1.0
Good for demos, especially those exposing core PS3 users to the graphical marvels of a PS3 successor. Good for low cost entry systems focusing on media streaming with a dash of gaming. Good for built in features in Bravia TV sets.

Posted:2 years ago

#15

Kevin Patterson musician

187 103 0.6
This would also be useful for Sony's MMO's....This is very interesting news, I wonder how MS's cloud is doing. Sony will have a cloud services ready to go very shortly... MS said in that leaked document that they weren't planning to roll out cloud gaming till 2015.

Posted:2 years ago

#16

Rod Oracheski Editor, Star News

58 23 0.4
Going from 'you must have Blu Ray for 1080p video and 7.1 surround sound' to 'streaming compressed 720p video is A-OK' so quickly is a remarkable philosophical change within the company.

Posted:2 years ago

#17

David Radd Senior Editor, IndustryGamers

359 78 0.2
I wrote last year that Sony should buy Onlive to make the PS Vita the ultimate streaming system. This is basically the same difference - it might be one of Sony's saviest moves in quite a while and could completely change the face of their gaming business (eventually).

Edited 1 times. Last edit by David Radd on 3rd July 2012 4:06am

Posted:2 years ago

#18
I think Sony is looking at various options. As such rather than build from ground up, they could take an existing platform, see how it works and custom build it and future proof it towards their unique needs.

Posted:2 years ago

#19
Time to learn a new word boys', "Ubiquitous Gaming"

Posted:2 years ago

#20

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