Sony and Microsoft team up on cloud-based gaming and entertainment (endgadget)

Sony and Microsoft team up on cloud-based gaming and entertainment (endgadget)

  • Sony and Microsoft recently announced their plans to collaborate to develop future cloud solutions for entertainment, game, and content streaming services.
  • The partnership also includes Sony using Microsoft Azure to support its current and future game streaming services, as well as tapping into Microsoft’s AI services to improve the user interface of its products.
  • Microsoft on the other hand gains a profitable customer for its cloud business as well as access to Sony’s image sensors, which it plans to use to create “new intelligent image sensor solutions.”

Analysis & Comments

  • We have now had announcements from a growing number of companies, including Verizon, Nvidia, Amazon, Valve, Electronic Arts, Tencent, Apple, Sony, Microsoft and Google about their cloud gaming projects.
  • The partnership between rivals Microsoft and Sony came as a surprise to many and to us very much seems like a “truce” struck to compete with Google’s cloud gaming service Stadia, which will be available to gamers by the end of this year.
  • The combination undoubtedly makes for a strong partnership and allows Sony to leverage Microsoft’s technology and data centres to help with areas it has previously struggled with (e.g. download speeds).
  • It also comes at a time where there is no industry standard for cloud deployment yet, and joining up with Sony increases the chance of Microsoft’s Azure to fill this space, in our view – particularly as Microsoft has recently announced a line-up of services for game development and cloud hosting that are aimed at game companies of all sizes, from indie developers to Triple-A studios.
  • Finally, this also opens up the possibility of cross-platform play in the future (which both companies have shown great reluctance to do in the past) – something the explosive success of the popular battle royale Fortnite has shown there is clearly demand for.
  • I continue to believe cloud gaming will bring more gamers into play by reducing the up-front hardware expenditure requirements, therefore massively expanding the potential addressable market for the video game makers.
  • However, there are currently still open questions around the pricing of such models as well as (key) issues around internet connectivity/performance (latency) which will take time to address

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