Sony acquires Gaikai for $380 million
SCE splashes out on cloud gaming service
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?"
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...
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.
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?
Future Sony TVs, tablets and phones will be bundled with a killer eco-system.
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.
Best of luck to all involved!
Edited 1 times. Last edit by Harrison Smith on 2nd July 2012 1:01pm
Edited 1 times. Last edit by David Radd on 3rd July 2012 4:06am