IN A NUTSHELL:
- The announcement of the cooperation between Sony and Microsoft surprised the employees of the PlayStation department;
- The Japanese had to decide on this move for fear of streaming and Google;
- In the short term, the agreement is beneficial to Sony;
- In the long run, Microsoft may be the winner.
Sony and Microsoft recently signed a sensational agreement to work together on streaming and AI, sharing information, technology and even elements of infrastructure. The goal is to bring about a positive change in the industry, thanks to which the games will become even better. The statement of the companies was a surprise to many people. Interestingly, according to Bloomberg agency, this group also included... members of the team responsible for the PlayStation brand.
Surprise for everyone
Negotiations on the agreement have reportedly been under way since the end of last year. It was the responsibility of Sony's management board, which did not involve the PlayStation department in the talks. The case was so surprising for the employees that there was a little panic after last week's conference - managers had to assure people that the company still plans to launch a new generation PlayStation on the market.
Why did the companies decide on such a move at all? According to experts, the reason for this is the growing threat from streaming platforms - including Google Stadia, which was announced in March this year. The Internet is becoming faster, and playing in the cloud is less and less different from the experiences that previously required the purchase of expensive equipment. Both companies realize that they have to evolve. Sony is in a worse position because Microsoft has strategic support in the Azure platform.
“Sony feels threatened by this trend [i.e. growing importance of streaming] and the mighty Google, and has decided to leave its network infrastructure build-up to Microsoft,” said Asymmetric Advisors strategist Amir Anvarzadeh. “Why would they sleep with the enemy unless they feel threatened?”
Streaming is the future?
Interestingly, the Japanese started to be interested in streaming earlier than Microsoft. In 2012, they bought a startup called Gaikai. Based on the technology created by the company, the PlayStation Now service was created, which so far has attracted about 700 thousand customers. Unfortunately, the lack of adequate network infrastructure limits both the availability and the quality of the experience.
It is also worth noting that so far Sony has worked with Amazon on network services - it is with the help of this company that PlayStation Network now operates. The Giants talked about the possibility of expanding the cooperation, but no agreement was reached. Perhaps this is due to the fact that Jeff Bezos' company is developing its own gaming streaming platform.
Who's gonna gain, who's gonna lose?
Who will gain from this cooperation? Most analysts agree that it can be beneficial for both parties. Sony will gain in the short term (already gained - after the announcement of cooperation, the company's shares increased by 9.99%) because thanks to Azure, the company will have secured its position in case streaming really dominates the industry in the future. Microsoft, on the other hand, increases the reach and attractiveness of its cloud, which may give it an advantage in competition with Google or Amazon.
Some experts point out, however, that in the long run, the current console king Sony may find himself between the proverbial hammer and the anvil. On the one hand, streaming can significantly reduce revenues from the sale of traditional games and platforms, and on the other hand, the Japanese will have to pay Microsoft for access to Azure. This will make it more difficult to compete with the Redmond Giant in gaming space.
"This move raises some serious questions about its [Sony's] future dominance," said Anvarzadeh of Asymmetric Advisors.
- Sony - official website
- Microsoft - official website