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Sony Teams Up With Microsoft for Streaming Games: Game On?

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In a dramatic turn of events, Sony Corporation (SNE) and Microsoft Corporation (MSFT - Free Report) — once thought to be bitter rivals in the gaming space — have joined forces to reshape the dynamics of the industry. The strategic partnership aims to tap the cloud-based platform for streaming games, while collaborating for the development of image sensors utilizing AI tools. Although the deal is still in a nascent stage, it has surely ruffled the feathers of other participants in the arena, and is likely to pep up the overall gaming industry.

On Cloud 9!

Sony and Microsoft have often crossed swords with each other with respective gaming consoles — Xbox One and PS4. But the two firms have now put aside their differences to share technologies and build upon integrated infrastructure for some of their future endeavors. Specifically, Sony intends to utilize Microsoft’s Azure cloud services for streaming games and media content to consumers while offering game makers new development tools to further enrich the interactive entertainment platform.  

Available in 140 countries in 54 regions worldwide, Microsoft Azure is a cloud computing service that leverages Microsoft's extensive data centers. This is likely to prop up PlayStation's game- and content-streaming services by overcoming one of its nagging problems — slow download speed. By moving over to Microsoft's cloud solutions, Sony is likely to iron out this technical issue and offer superior consumer experience through improved user interface.

Reciprocal Symbiosis?

Microsoft also stands to benefit from the deal by adding a major customer to its highly profitable Azure cloud computing business. This is further likely to strengthen its market position against stiff competition from, Inc.’s (AMZN - Free Report) Amazon Web Services. In addition, it is expected to negate Amazon’s foray in the gaming domain with its nearly $1 billion acquisition of Twitch, a leading live streaming platform for gamers.

Furthermore, the deal would help Microsoft to gain access to Sony's image sensors to help create "new intelligent image sensor solutions" by leveraging its own AI solutions. This is expected to improve the functionality of the sensors for enterprise customers, although finer details are yet to be divulged.

Should Google Worry?

The unlikeliest of the pairing is perhaps aimed to take competition head on as Alphabet’s (GOOGL - Free Report) gaming platform Stadia is primed for the market later this year. Stadia aims to outsmart rivals by enabling users to stream games online on any device like smartphones, laptops, desktops and tablets or on televisions with the aid of Chromecast media stick connection, without shelling out extra money for expensive gaming consoles and PCs. The company also intends to leverage its video streaming platform, YouTube, along with its cloud computing capabilities to ensure seamless gaming facilities.

With the partnership, both Sony and Microsoft are aiming to boost the capabilities of PS4 and Xbox and counter whatever Google Stadia plans to bring to the table. Notably, Microsoft’s Xbox is also collaborating with Nintendo Co., Ltd. (NTDOY - Free Report) by offering its games and services through Nintendo Switch gaming console. Per media reports, Microsoft is reportedly planning to bring Xbox Game Pass and xCloud (its upcoming game streaming service) to Switch. It appears that rival firms are all getting united as new challengers are attempting to upend the industry, and Google should surely take a note for an appropriate action.

Game on, Gamers?

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