Microsoft Deal Was A Surprise To Us — Sony PlayStation

Sony & Microsoft Announce Gaming Partnership: Report

Report: Sony Interactive Entertainment was in talks with Amazon, staff was blindsided by Microsoft partnership.

After last week's announcement that Microsoft and PlayStation's Sony would be working together through Microsoft Azure, rumours are surfacing that Nintendo will be doing the same.

Rather than continuing to build its future streaming services around the Gaikai servers Sony bought for $380 million back in 2012, the company will instead pay for access to Microsoft's Azure technology.

Both the companies are teaming up to work on cloud products for their respective game and content-streaming services. According to a report from Bloomberg, Sony's senior management team in Tokyo was responsible for the negotiations with Redmond, meaning the PlayStation team were left out. But Sony's server and network infrastructure has proven insufficient to provide the "as good as local" experience promised (but yet to be proven) by major competitors like Google's recently announced Stadia service.

Hopefully, more details about the Sony and Microsoft collaboration will begin rolling out soon. "Sony feels threatened by this trend and the mighty Google, and has made a decision to leave its network infrastructure build-up to Microsoft", adds Asymmetric Advisors strategist Amir Anvarzadeh. One person "familiar with the matter" told Bloomberg the two companies "couldn't agree on commercial terms" for the deal.

Microsoft was the obvious second choice, and the consensus seems to be that at least in the short term, Sony is the big victor here. "Staff at the gaming division were caught off-guard by the news". What's more, if Azure is adopted as the industry standard for cloud gaming, it could force Google out of contention and eliminate a key rival.

On the news of the monumental partnership Sony's shares ticked up 9.9% and the day accounted for the single best day in the past 18 months for the company. There have been no changes in stock prices today. It could be Xbox that ends up with a huge advantage over its rival from a technological and pricing standpoint.

In the future, the deal could turn sour for Sony.

The move makes sense for PlayStation who has spent years developing its own cloud gaming offering - PlayStation Now, still unavailable in Australia - which has failed to make a major impact on the market.

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