Monday, 2 July 2012

Sony Acquired Gaikai for $380 Million

Sony acquired cloud gaming company Gaikai for $380 million. Through the acquisition, Sony will establish a new cloud gaming service, ensuring that it continues to provide users with truly innovative and immersive interactive entertainment experiences. There were certainly enough rumors about Sony buying Gaikai before this year's E3 and not long ago it was reported that Gaikai is up for sale for over $500 million. As it looks like there was substance in the rumors and barring any regulatory approval problems, this is a done deal.

"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 Andrew House, President and Group CEO of Sony Computer Entertainment. "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."

"SCE has built an incredible brand with PlayStation and has earned the respect of countless millions of gamers worldwide," said David Perry, CEO of Gaikai. "We're honored 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."

With this acquisition, SCE will establish a cloud service and expand its network business by taking full advantage of Gaikai's technology and infrastructure including data centers servicing dozens of countries and key partners around the world.

It remains to be seen what will happen with Gaikai's current deals with Samsung and LG, as these companies are large Sony rivals in consumer electronics. It also remains to be seen what will happen with Gaikai's current core business of serving cloud gaming demos to web sites like Facebook, YouTube, Walmart, Origin and many others.

It will also be interesting to see what will happen with Gaikai's partnership with NVIDIA and their commitment to install Geforce GRID cloud gaming technology in their data centers. Sony will purportedly use AMD hardware in their next-gen PS4 consoles, so that is another topic that will get a lot of exposure during the next months as Gaikai gets integrated into the Sony machinery.

Of course the question comes up where does that leave OnLive, the pioneer of cloud gaming and Gaikai's biggest rival. Early last year VentureBeat put OnLive's overall valuation at $1.8 billion, which means that by now that valuation must have increased considerably. OnLive was also part of the Sony buyout or partnership rumors before E3, and recently some leaked Xbox 720 roadmap PowerPoint slides surfaced that put OnLive up as a potential Microsoft acquisition target. OnLive is quite a formidable force in cloud gaming, as they continuously operate a full cloud gaming service for over 2 years and were also granted many important patents in the field of cloud gaming. These facts could have made a Gaikai acquisition less enticing for Sony, and of course less lucrative for Gaikai and their investors. The fact that Gaikai was sold for $380 million to Sony, instead of the over $500 million that Gaikai wanted, hints that way.

Maybe history will repeat itself and Microsoft will buy out one of Steve Perlman's creations again, I mean OnLive already has Live after the On, so it is meant to be On Microsoft's Live service. We already know about Microsoft's friendly inclination towards OnLive Desktop. OnLive Founder and CEO Steve Perlman also loves to name his companies with a meaning behind the name. For instance, Perlman's Rearden business incubator that has given birth to OnLive is named after Hank Rearden's company Rearden Steel. Hank Rearden is one of the main protagonists of Atlas Shrugged, the novel by Ayn Rand. The name OnLive just screams, "Microsoft, buy my company, then Live will really be live."

Of course Microsoft may have already tried to buy OnLive and was not successful. OnLive Founder and CEO Steve Perlman has already stated that they want to pursue a cloud gaming future on their own and they do have large investors and partners like AT&T, BT and Warner Bros., which might not be well inclined to sell a company that could bring about the future of gaming to a company like Microsoft that has the habit of monopolizing the market and strives to do the same with entertainment.

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