Sony Buys Gaikai – What Does This Mean For PS4?

The rumours come true.
[drop2]The rumours, finally, have come true – Sony is to acquire Gaikai, one of the two main (along with OnLive) cloud gaming companies, with the press release saying they are the “leading” one.

Gaikai pre-empted this recently with the news that they expected to be bought.

Sony have this morning confirmed that last week they “entered into a definitive agreement” to acquire Gaikai Inc. for approximately USD 380 million.

“Through the acquisition,” says the statement, “SCE will establish a new cloud service, ensuring that it continues to provide users with truly innovative and immersive interactive entertainment experiences.”

“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 Inc.

“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.”

It’s interesting that House is stating that games will definitely feature, something we thought about a little while back when we first heard the rumours about Gaikai or OnLive. Basically, we said that a PS4 doesn’t technically need to exist – next-gen can all be streamed over the cloud to a PS3 or a Vita.

Read our earlier thoughts and see what you think, and whilst we said back just before E3 that such a deal would mainly be for PS1 and PS2 games, there’s little to suggest that SCE won’t really want to push this tech.

“If you have a PlayStation 3 or one of our speculative PlayStation Lite consoles you won’t need to buy a PS4,” we said back in May. “PS4 games will be available to you on your PS3 via streaming.”

“Sony can make hardware (and price it accordingly – i.e. bloody expensive) to those who want it, everyone else can switch on their PlayStation 3 and skip the expense and hassle of upgrading. The bank of PS4s at Sony will power the games, and stream them to your PS3 just like Gaikai does.”

“Sony might even miss the PlayStation 4 hardware phase altogether,” we continued, “that seems to be what Nanea Reeves was suggesting back in January. Skipping the costly first half of its life, when they’re selling at a loss and allowing half their users to stream on cheap hardware would be a huge money-spinner for them early on in the new console’s life.”

All that discussion suddenly seems a lot more real.

“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 Inc.

“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.”

The press release says that SCE will “establish a cloud service and expand its network business by taking full advantage of Gaikai’s revolutionary technology and infrastructure including data centers servicing dozens of countries and key partners around the world.”

Whilst the transaction is subject to certain regulatory approvals and customary closing conditions, this is hugely exciting, especially after an E3 that was desperately in need of some new technology from Sony and Microsoft.

86 Comments

  1. Surely this would be affected heavily by internet speeds? I remember this being touched on before, I don’t enough gamers have the internet speeds for this kind technology to really work.

    • But some do, hence the options. If they can bring full PS3 games to my Vita via streaming I’ll be happy. If they can do that for PS4 it’ll be amazing.

      • Ooh, PS3 games streamed to a vita would be the factor that finally forces me to purchase a vita. I never thought of that possibility!

      • I agree that it is the way forward, i’m worried it might leave behind gamers that don’t have the internet speeds and we might see people having to spend a heafty amount of money to catch up -“Sony can make hardware (and price it accordingly – i.e. bloody expensive) to those who want it, everyone else can switch on their PlayStation 3 and skip the expense and hassle of upgrading” It seems an expensive penalty for not having sufficient internet, I’m totally for technology moving forward and as I said I believe this is the right wa forward, but Sony could be leaving a lot of people behind here.

      • Yep, if they streamed PS3 games to Vita, that’d probably tip me over the edge into buying one.

        Streaming is the future, no two ways about it imo.
        There are a lot of people who don’t have the speeds etc right now, but there are a lot of people who do as well, Japan has one of the best…

      • Yay on the announcement and yay on the new message box/layout (you are always working on new things for this site Alex, and it’s been great watching it grow from the humble beginnings) been on holiday so just thought i’d comment…

    • They say a three meg connection is all you need. I tried it the other day with BT infinity; The Witcher & Mass Effect 3 demos looked a hell of a lot better the the 360 version. The only thing I noticed was that lip syncing was not quite right.

      • The lip sync issues are features, not bugs :)

        Console versions prove that right :)

  2. I amazed Sony can spend so many millions on this when year after year they’re making such massive losses. They’ve certainly got some very trusting lenders.

    On another note, I’d be very surprised if we don’t see hardware for PS4. The general public wont understand that PS4 games are being streamed to PS3, they’ll just think that Sony are a generation behind when MS release their next gen console and think the only next gen console available is the MS one. It would take some seriously good marketting to make people understand that PS3 does PS4, and we all know how crap Sony are at advertising.

    • The PS4 could just be a dumb terminal though. Like OnLive’s minibox – a tiny wee black box with a controller that just gets the internet stream and chucks it at your TV.

      Super cheap.

      • Just no.. Seriously making it streaming only would MASSIVELY cut there user base.

        PS4 need’s a blu-ray option as retail still dominates in the UK/US so making it streaming only would be stupid in the extreme.

        Give the option to stream yes but not the ONLY option.

        Choice is key – why do people have to think in terms of this OR that when it can be this AND that.

      • What about a ps4 that is a full console that uses streaming to offer ps3 backwards compatibility?

      • Could be but it won’t.

      • Dominating but declining year on.

      • I agree with damoxuk. I stream software applications at work daily and I have been doing it for years. Even though I have access to powerful machines every time my desktop PC is to be replaced I always get the most powerful one I can get my manager to approve. Streaming is always going to introduce a bunch of problems that are unsolvable. As such it can complement local processing but it doesn’t do away with it.

  3. I don’t want cloud gaming – not only do I want to own (ie. physically hold) what I pay for, but from what I’ve learned from any subscription (gym, O2, insurance), once they’ve got you by the balls they can increase the subscription anytime they like, knowing that if you’re half way through a game, you’ll most likely keep paying. I hope this is a long way off as we all suffer from internet problems at times too, which would make the service and games all unaccessable.

    • If anyone has shown that they’re handy at keeping prices reasonable, it’s Sony. See: Plus.

    • If the PS4 becomes streaming only, then I’m officially not taking the leap.
      I’m not even 100% comfortable with purchasing a digital download, because they can revoke your user privileges – like they did when they shrunk the number of console activations from 5 to 2.

      • Indeed – aside from the money, it’s that I’d be passing over my money but never really be in control of what I’ve purchased. It’s not for me unfortunately. But at least I may get to finish my PS3 backlog if I don’t go for this streaming – every cloud! Oh, bad pun.

  4. Good & sensible move by Sony.

    Does leave a few questions though, like how Sony will use it.
    Will they bring backwards compatibility to the PS4, if so will that include all games & all 3rd parties, it’s possible existing licences will need to be renegotiated so some or even many 3rd party titles could miss out. A client which access the cloud can be anything from that has a net connection & is powerful enough to run a YouTube video, which kind of removes the need for a PS4 at all.

    Given that platform holders only generally make money from a platform in the 2nd half of its life & as the net gets better over time, actual PS4 hardware could sell poorly in the second half of its life if the gaming it offers is available over TVs, tablets & smart phones (prob not iOS though thanks to their 30% cut unless it can be worked around)

    Will Sony do what they’ve always done and build these internal Sony silos making Gaikai only available on Bravia TVs, Xperia phones & tablets and whatever home & portable consoles they have… or will they want the platform to be available to everyone everywhere.

    Gonna be interesting.

    • I can’t see Sony spending this amount of money then restricting this service to people with Bravia’s or Sony phones. Surely they have to try and make this as open a platform as possible? Maybe even keep it altogether seperate from PS4 and just have it as a game streaming service for PC?

      • I know… but look at PS Suite & various other Sony initiatives that make a list as long as your arm, an ideas company with sometimes an awful follow-through on things… and yet other times they’re awesome.

  5. The interesting thing, of course, is when will Microsoft buy OnLive?

    • I tried Gaikai out recently and it was horrible. The promise was there but on a BT Infinity connection (38Mbit download, 8Mbit upload) it was laggy, lacked any sort of clarity to the resolution and the sound was average at best. First impressions count and this was bloody awful.

      Hardware please (in my own abode) for now.

  6. I have no interest in streaming

    • Neither did I until this announcement, I’m intrigued to see what Sony does with it.
      But the big stumbling block for me is if the broadband goes down you won’t be gaming at all.

  7. Better late than never :)

  8. My 8Mb connection isn’t enough for current Gaikai browser games so i can’t get too excited about it yet but it’s still going to be interesting to watch things develop.
    I wonder what this means for the Samsung/Gaikai deal, will that still go ahead and if so i guess it wouldn’t be surprising to see Sony make the service available to other third parties in the future.

    • really? :-( I only get about 1Mbps max on my 3Mbps connection – so I guess that counts me out then. Will be a while before I upgrade too.

    • It’s about the quality of your connection not the speed, 2mbps is more than fine for a video steam & 4.5mbps for a HD stream. If your quality is poor though you’re going to have latency & lag which will hinder your ability to play some genres.

      Gaikai running well beats games running locally like Killzone 2, doesn’t run that well for me though as my connection is about 2mbps at best & I get a lot of artifacting on screen making it unreadable & depending on genre, unplayable too.

      But, net will only improve with time & Sony now have this weapon in their armoury

      • It’s still not as good as having a local box as even on the best connections lag is still there – factor in MP then you have double lag.

        Sony won’t make the next ps4 streaming only. People at Sony specifically stated that the world isn’t ready for download only yet and that will mean streaming.

        Still as a way to get more people on Smart TV’s etc or playing older games it’s great but replacing local gaming will be more of a downgrade for a lot of people.

      • Lag is there on local systems too, Gaikai when it’s running well beats titles like Killzone2 running locally, whether it runs well or not depends on your distance to their data centre & importantly the quality of that connection, it’s not for everyone (me included) just yet, but having that string to your bow now will stand you in good stead for the future.

      • I know realistically i only get about 5Mb on my 8 Mb connection and i can watch HD streaming video fine without buffering so i guess it must be down to the quality/lag then. My provider is in the process of switching to fibre so hopefully that will improve things.

  9. Bad investment imho.

    • You’d sooner Sony not be involved in the future then?

      • Surely with the $380m they spent acquiring Gaikai they could have just developed their own cloud based gaming service. I’m sure Gaikai didn’t start their company with that much money.
        After using Onlive, I don’t see cloud based gaming as the future. My internet connection is 15mbps but when me and two of my flatmates all tried to play Borderlands on onlive together, the internet couldn’t handle it. I can’t see this problem being fixed in the near future. I just can’t see this investment working out for Sony in the long run.

      • You must have a poor quality connection or equipment then, because 1.5mbps streams a video jut fine & 4.5mbps streams a HD video just fine, although thanks to variations in quality I think they recommend 2mbps & 5mbps

      • Sony could have built their own, they already have experience encoding video to stream to a client/server gaming model with Remote Play where the PS3 encodes a video of the game being played (acts as the server) and then streams that too a PSP, Vita or Vaio laptop (acting as the client) the end user is then essentially playing a video feed of the game running elsewhere.
        Sony must have seen something in Gaikai’s encoding/streaming/data centre tech/patents & engineering talent that made it worth buying rather than creating or iterating on their existing tech.

      • i tried gaikai just before e3 and would take my console over it anytime. maybe i’m not ready for the future.

  10. I couldn’t care less about streaming, the infrastructure in the UK simply isn’t good enough for most people to stream games. And it would be crazy for sony not to release a PS4 imo.

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