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Sony jumps into cloud gaming, acquires Gaikai for $380 million

July 02, 2012|By Ben Fritz
  • Gaikai Chief Executive David Perry
Gaikai Chief Executive David Perry (Mark Boster / Los Angeles…)

Sony Corp. is expanding its video game business beyond the PlayStation by acquiring Gaikai Inc. for $380 million.

Gaikai, headquartered in Aliso Viejo, is one of the leading companies in the new business of cloud-based video games, through which people can play on any Internet-connected device.

Just as with Netflix, the games are stored on a server and are streamed directly to a computer or TV without the need for a disc or download.

The 4-year-old company offers games from partners including Electronic Arts, Ubisoft, and Warner Bros. It has long been rumored as a likely acquisition target for an established technology company such as Sony.

In a statement, Sony’s top video game executive, Andrew House, said his company plans to utilize Gaikai’s technology and talent to launch its own video game streaming service. Such an offering would mark a big shift for Sony, which has for the past 18 years centered its game business on the PlayStation console.

But with the PlayStation 3 lagging in sales behind Nintendo’s Wii and Microsoft’s Xbox 360 and consumers increasingly turning to casual games on the Web and mobile devices, the Japanese electronics giant has needed to make a shift.

The new Gaikai-powered cloud service will give Sony a presence on a broad array of digital devices and expand its existing online media offering beyond movies, music, and game downloads.

Sony’s cloud gaming service is also sure to be integrated into its other electronics devices, including Bravia televisions and Vaio laptop computers.

Several companies have developed similar services and compete with Gaikai, including OnLive Inc. and Playcast Media Systems.

Eventually, most video games are expected to be played via the cloud, but current broadband speeds don’t allow the most sophisticated titles to work that way without glitches.

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