PlayStation Team Reportedly “Blindsided” by Sony and Microsoft’s Azure Deal

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When Sony Corp unveiled a cloud gaming pact with archrival Microsoft Corp, it surprised the industry. Perhaps no one was more shocked than employees of Sony’s PlayStation division, who have spent almost two decades fighting the US software giant.

Discussions between the two companies – which celebrated their union with an image of Sony boss Kenichiro Yoshida and Microsoft head honcho Satya Nadella shaking hands – were conducted at a level senior to the PlayStation division, the report continues. Eurogamer understands many at Xbox were similarly unaware of the decision, which was planned at a high level within Microsoft.

Such a union between two big console gaming rivals is naturally surprising – but it speaks to the importance of cloud-computing infrastructure and how the next generation of gaming hardware will demand it. And, of course, the threat of new rivals, Google and Amazon. The Sony-Microsoft deal has been in the works since last year, but negotiations were strictly handled by Sony senior management in Tokyo, without the involvement of the PlayStation team. When the partnership was announced,  it reportedly set off a wave of panic within the PlayStation team, with managers having to ensure employees this won’t impact the development of Sony next console. According to Asymmetric Advisors strategist Amir Anvarzadeh, Sony’s surprise team-up with Microsoft may come from a place of fear…

Sony feels threatened by this [cloud gaming] trend and the mighty Google, and has decided to leave its network infrastructure build-up to Microsoft. Why would they sleep with the enemy unless they feel threatened?

Sony became the first big video game company to enter cloud gaming when it bought U.S. startup Gaikai Inc. in 2012 for $380 million. Three years later, it rolled out PlayStation Now, letting users play games hosted on servers miles from their living rooms. The service has since attracted 700,000 paying subscribers, but a decision to host it in-house has led to on-going complaints about choppy connectivity. “PlayStation Now has been a very limited service,” chief executive officer of DFC Intelligence.  Microsoft is going from being a competitor in a three-way console war to having their hands in every pot. That said, expect Google to make some aggressive moves to combat Microsoft’s planned game-streaming monopoly.

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