Sony acquires Gaikai for video game streaming - AVS Forum
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post #1 of 13 Old 07-02-2012, 08:02 AM - Thread Starter
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Thanks to Mikazaru for pointing this news out in the streaming speculation thread.. Here's the press release:
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Sony Computer Entertainment to Acquire Gaikai Inc., a Leading Interactive Cloud Gaming Company

SCE to Build a Cloud Service Bringing Gaikai's Cloud Based-Streaming Technologies into Its Network Business

TOKYO, July 2, 2012 /PRNewswire/ -- Sony Computer Entertainment (SCE) today announced that it entered into a definitive agreement on June 30, 2012 (Japan Time) to acquire Gaikai Inc., the world's leading interactive cloud-based gaming company, for approximately USD 380 million. Through the acquisition, 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."

"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."

Established in 2008 and headquartered in Aliso Viejo, California, Gaikai has developed the highest quality, fastest interactive cloud-streaming platform in the world that enables the streaming of quality games to a wide variety of devices via the internet. With this acquisition, 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.

The transaction is subject to certain regulatory approvals and customary closing conditions.

SCE will continue to aggressively expand a new world of entertainment through the introduction of innovative technologies and the delivery of amazing experiences.

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post #2 of 13 Old 07-02-2012, 10:59 PM
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This is pretty crazy for a number of reasons. The biggest reason is the fact that Sony is hurting in so many areas, yet they go spend 380 million on a venture that is incredibly speculative. I was listening to a podcast the other day, and they were talking about a price drop for the PS Vita or the PS3 system. They were speculating whether both systems would drop to $199 (especially the Vita). Ultimately, they decided that Sony isn't in a position financially to take such losses on the Vita so early in it's life cycle. Yet, they go drop 380 million on a company that isn't doing anything all that amazing. You'd think Sony's own engineers could figure out a way to do what Gaikai and OnLive are already doing. I mean, am I seriously supposed to believe that Gaikai and OnLive have some super ground breaking technology that can't be imitated with some of Sony's own R & D ?

I'm guessing that Sony could have spent 100 million on their own R & D and figured out how to stream things just as effectively as Gaikai or OnLive. This move smacks of desperation on their part. I know that Sony is going to build in this tech with their TV's, and they hope it will give their TV's a shot in the arm, but I'm having a difficult time believing that this investment is going to really pay off for them.
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post #3 of 13 Old 07-03-2012, 01:21 AM
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^Why waste time building their own when someone else(Gaikai) already did it for them? This isn't a new strategy in business, especially in the tech industry.
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post #4 of 13 Old 07-03-2012, 07:27 AM
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Quote:
Originally Posted by Anthony1 View Post

You'd think Sony's own engineers could figure out a way to do what Gaikai and OnLive are already doing. I mean, am I seriously supposed to believe that Gaikai and OnLive have some super ground breaking technology that can't be imitated with some of Sony's own R & D ?

1. Sony's own R&D costs money and time. Time is usually more important than money.
2. Gaikai and OnLive file for patents on the technology they come up with. If Sony (or anyone else) violate the patents in the course of their work, then they are looking at royalties and/or a court case.

No, it often is easier just to spend the money. $380 million is not a lot of money, especially if game streaming is expected to be big business going forward.
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post #5 of 13 Old 07-03-2012, 07:33 AM
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Gaikai also has hardware installed all over the globe. They have a strategic relationship with Nnidia, using Kepler to lower latency. They are also the best at what they do,, better IQ and latency than Onlive. $380M was probably a bargain, Gaikai was seeking $500M.

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post #6 of 13 Old 07-03-2012, 09:34 AM
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This was the announcement I kind of expected for E3 but close enough. The word is Gaikai has the stronger network compared to Onlive but that can change. Makes me wonder if Onlive just didn't want to sell or was too expensive.

The money seems big now, really big considering where Sony is financially, but they are making a pretty safe deal considering where media in general is heading. Add that they also bought a customer base that's creating revenue now (over 10 million at end of 2011 says a quick search), the future customers in the Samsung smart TV deal, and 388 million isn't so much. This also seems early enough that it gets integrated into whatever hardware and network the PS4 will be using. My biggest surprise is that Sony is doing this before anyone else, console wise.

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post #7 of 13 Old 07-03-2012, 12:44 PM
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http://www.gamesindustry.biz/articles/2012-01-23-full-gaming-streaming-coming-to-gaikai-within-months

http://www.eurogamer.net/articles/digitalfoundry-in-theory-sony-gaikai

Gaikai seems better and is a relative bargain (OnLive valuations are as high as $1.8 billion). It's a good acquisition by Sony IMO.

"There's a very big difference between the way we're doing it and the way OnLive is doing it. They have to modify the game, they have to get the source code to the game. Gaikai doesn't require modification of the game.

"To give you an example The Witcher II was given to us and them at the same time. We went live with Witcher II immediately and now four or five months later they still don't have that live, and that's because they have to touch the code. The whole structure of Gaikai is about not touching the code. When we show World of Warcraft it's the real thing, it's not like we had to go and tweak it to get it to work. That means that every game in history remains compatible with our solution."
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post #8 of 13 Old 07-03-2012, 12:48 PM
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With Sony's revitalized push into PS+, it would make sense to use the Gaikai acquisition to further beef up its PS+ service. The increased revenue from subscriptions alone would justify the purchase in a very short amount of time. I can only guess that this wasn't announced at E3 because the deal wasn't finalized. It would have been a very different E3 for Sony if they had been able to announce that then.

There are still a lot of questions. The biggest for me is whether or not we will see the tech applied to the PS3, or if it will be the selling point for their next console. But there are lots of other questions, too. For example, will this only apply to Sony's first-party titles? Will this mean PS3 games appear on PC? Will this work with Vita? Can the tech be applied to other uses, like music or video? Etc.

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post #9 of 13 Old 07-03-2012, 03:14 PM
 
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Quote:
Originally Posted by ninjachicken View Post

^Why waste time building their own when someone else(Gaikai) already did it for them? This isn't a new strategy in business, especially in the tech industry.

Not just that, but 10-1 Gaikai owns some lucrative patents for anyone planning on cloud service games.

While it remains to be seen if it's a smart move, I doubt the stuff we see on the surface is the real reasons. Facebook just did something similar with instagram, and google with Motorola.
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post #10 of 13 Old 07-03-2012, 03:18 PM
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Quote:
Originally Posted by TyrantII View Post

Not just that, but 10-1 Gaikai owns some lucrative patents for anyone planning on cloud service games.
While it remains to be seen if it's a smart move, I doubt the stuff we see on the surface is the real reasons. Facebook just did something similar with instagram, and google with Motorola.
For all we know, it could very well just be a last-ditch effort for Sony to save their line of TVs. Sony themselves may not know exactly what they'll use it for--if anything. As you say, it could just be a potentially lucrative patent grab.

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post #11 of 13 Old 08-17-2012, 01:14 PM
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post #12 of 13 Old 08-17-2012, 01:31 PM
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Not surprised if this is in fact true.

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post #13 of 13 Old 08-17-2012, 04:20 PM
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It was like Gaikai and OnLive were playing a game of chicken, driving up their valuation and withholding suitors as long as possible. Once Gaikai blinked first (by selling to Sony) that must have put OnLive in a precarious position. They either needed to find a buyer right away, or they were toast. Sounds like the latter may be what happened.

It's also possible that most potential buyers would rather have the tech patents than the entire organization. It may be that this mass staff reduction is OnLive's way of making the company more attractive to potential buyers.

Just guesses, though.

EDIT: Based on an account from one of the affected employees, it sounds like my hunches are pretty much spot on:

http://www.joystiq.com/2012/08/17/source-onlive-ceo-showed-no-remorse-when-announcing-layoffs/
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Multiple offers were made to purchase the company over the last few months, including one from Hewlett-Packard. Company management said it was investigating offers; however, it was widely known to employees that Perlman was looking for an offer in the range of $1 billion.

"Steve got all excited when Gaikai got acquired, because it kind of validated everything we did," our source told us when asked if Sony's acquisition of the streaming service company changed an attitude in the office. At around the same time Sony made the acquisition, OnLive's patent for gameplay streaming went through. "So all of a sudden, Steve was like 'When the time is right, we're going to hit them with our patent because we're not going to let some two-bit company ride our coattails,'" the source claimed, explaining the threat was made to the entire company soon after Gaikai was acquired.

"I guarantee that some time in the future, Steve is going to go to court and sue the **** out of them for stealing our ideas," the source said.

I definitely feel bad for the sacked employees who got caught in the crossfire. The gaming industry's biggest gambles are wreaking havoc on those doing the bulk of the heavy lifting. This seems like the latest in a string of dirty business tactics.

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