Sony Will Acquire Cloud Gaming Pioneer Gaikai

July 6th, 2012 | No Comments | Posted in General

With no new gaming hardware unveiled, the reaction to the recent Electronic Entertainment Expo from gamers worldwide was one of disappointment. But perhaps a future in which gaming hardware is irrelevant is not far away.

Sony’s announcement this week that it will acquire cloud gaming pioneer Gaikai is yet more evidence that the future of gaming will leave physical media behind.

The US$380 million purchase provides Sony will all of Gaikai’s technology and infrastructure, which should enable the Japanese electronics giant to soon offer streaming content to PlayStation console owners as well as other devices like mobile phones, tablets, PCs and televisions.

Sony Computer Entertainment president and CEO Andrew House says “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 unparallelled cloud entertainment experiences”.

“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.”

Gaikai was established in 2008 and enables consumers to play high-end games on relatively weak devices such as TVs, tablets and smart phones via an online connection. The processing grunt is provided by the remote server host, not the client.

Over the past month there had been strong rumours that Gaikai technology would be used to re-introduce backwards compatibility to PlayStation 3, allowing users to stream PSone and PS2 games.

But the Gaikai acquisition has much broader implications for bringing PlayStation content to a wide variety of devices, including smart televisions that can offer games without the user ever having to invest in a console, widening the gaming audience considerably.

The investment is also a signal that PlayStation 4 might be a game changer, turning its back on retail game distribution in favour of a combination of cloud streaming and digital downloads.

It might also mean Sony is in even less of a hurry to move to PS4 than previously thought, that the aging PS3 hardware could get a new lease of life via the potential power of the cloud.

Cloud gaming would certainly make a subscription service like Sony’s PlayStation Plus a much more tantalising option.

PlayStation Plus currently offers PS3 owners access to a selection of games each month, but would be much more attractive if games were streamed rather than having to be downloaded. Gaikai’s strength to date has been providing instant access to game demos to consumers without the need to suffer lengthy downloads.

The benefits of cloud gaming for Sony and other publishers are obvious. There would be no more piracy and no pre-owned market to cannibalise sales. There would also be no middlemen like retailers and distributors taking a slice of the pie.

Presumably, that means cheaper games for us, along with benefits like access to new games instantly on release day without dreary downloads, installs and loading delays, and no need to constantly update software and hardware.

Servers would also typically offer much more powerful hardware than any home console or handheld device, potentially offering more dazzling experiences.

There seems little doubt that Microsoft will also employ streaming technology in their next Xbox console, particularly if you believe the rumour mill. Cloud gaming outfit OnLive could be an acquisition target if Microsoft feels it needs some assistance, although it already has a lot of experience with streaming services.

But there are still major performance concerns with cloud-based gaming, particularly in this pre-NBN era where most Australians experience poor bandwidth, slow response times and data caps. And Australia is far from alone in terms of poor broadband infrastructure.

But like what we have seen in the music industry with iTunes (and increasingly with video via a range of digital distribution services) the vast majority of users might be prepared for a drop in quality if the convenience, range and price are far superior to physical media.

And hopefully as broadband infrastructure improves it’s just a matter of time before the quality of the experience isn’t really an issue at all for the vast majority of gaming consumers.

The big hope is that the new technology can enable us to continue to enjoy original, cutting-edge games. It’s been a major concern of this current console generation that the economics of game making just don’t stack up – the ever-increasing cost is simply too great, making publishers incredibly risk-adverse and retail shelves incredibly bland.

The cloud opens up many pricing models, including time-based billing or subscription deals, that could allow most consumers to pay less than they currently pay to play but publishers to receive more financial reward for their investments.

Do you think cloud-based gaming is the great white hope of the gaming industry or just a pipe dream? Let us know in the comments section below.

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