Sony Acquires Gaikai

 In Acquisition/Investment, News, Sony

Gaikai’s E3 meeting room in 2011.

JULY 2, 2012 • A month removed from the Electronic Entertainment Expo one of the bigger rumors from the show has come to pass: Sony Computer Entertainment has acquired cloud streaming service Gaikai for $380 million. With plenty of electronic devices that can benefit from Gakai’s network, the acquisition is clear win for Sony at a modest cost investment. Sony fully intends to utilize Gaikai as the foundation of its own cloud delivery service. What Sony will not state is what happens to Gaikai’s content agnostic focus, the service’s existing retail contracts to provide game demos, as well as the recently announced deal to provide the foundation for Samsung’s cloud gaming service.

Impact: This is a major deal because it shows Sony’s long term commitment to the games business. The thing about services like Gaikai and OnLive is you still need a screen.  In the case of Gaikai, the service was also about driving users to buy a full version of the product for their specific hardware device.  So in this case Sony is a good fit because they have multiple hardware devices and a service like Gaikai can help tie them together and also bring in users to the PlayStation brand that do not own a Sony hardware device. However this does not necessarily mean Sony’s competitors will rush to acquire the OnLive streaming service, which is focused on delivering content to PCs or a proprietary device connected to TVs. Microsoft already has its Azure cloud computing platform that is reportedly being considered for use in Xbox hardware, and Nintendo has not been strongly focused on the cross platform issue which is a big reason for Sony’s purchase of Gaikai. As for Gaikai’s existing business, certainly there is the potential for Sony to treat it as a new revenue center, regardless how big or small, where third parties can advertise games paying Sony for bandwidth time using Gaikai’s exact model. Whether Sony chooses to pursue that or not, adding Gaikai to the PlayStation brand certainly gives Sony a robust upgrade in cloud infrastructure that could be very valuable now and down to road.  Overall, DFC sees this as a purchase about planning for the future.

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