Sony-Microsoft Deal “Blindsided” Playstation Team

The unexpected alliance between gaming rivals Sony and Microsoft caught the world by surprise last week, most shocked of all was the in-house PlayStation team who were unaware of the deal’s existence.

Bloomberg reports that when the news of the strategic partnership was released, PlayStation staff were “stunned” after spending more than twenty years battling it out with Microsoft’s Xbox in the lucrative video game console market.

The newly inked deal reveals plans for the two gaming giants to co-develop game streaming technology and host PlayStation content and online services on Azure’s cloud platform.

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.

Sony’s other streaming service, PlayStation Network, allows gamers to engage in multiplayer gamers on PS4 consoles and is currently hosted by Amazon Web Services.

Bloomberg reports that Sony first approached Amazon — who is also reportedly working on a gaming platform — to further its cloud gaming plans.

However, talks broke down as they failed to “agree on commercial terms” leading Sony to turn to one-time rival Microsoft.

A Sony spokesman confirmed that negotiations began last year and were reportedly handled by Sony’s senior management in Tokyo with no involvement of the PlayStation team.

PlayStation earns approximately a third of Sony’s profits but without its own powerful cloud computing service and data centres, it wouldn’t have kept up with Microsoft and Google’s upcoming Stadia platform.

Following news of the deal, Sony jumped 9.9%, the most in 18 months and announced a record share buyback.

Many analysts agree that it is a positive forward-thinking approach for Sony, as cloud gaming isn’t ready for global rollout yet but prepares the company for if/when consoles become obsolete.

As such, Sony and Microsoft are still expected to unveil their respective next-gen consoles next year, which may have a cloud component like the recently unveiled All-Digital Xbox One S.

Microsoft has now positioned itself as an even bigger player in the global gaming market as it converted its one-time business rival into a business partner.

Also, securing Sony for its Azure business could make it the new standard for cloud deployment over Amazon Web Services.

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

If streaming takes off in the gaming space — as many have predicted — it would mean that it will have to compete against Microsoft’s Xbox while also paying for cloud access.