Sony buys Gaikai: Why cloud gaming could save PlayStation by turning it into something very different

So, financially-troubled Sony has bought cloud-gaming network Gaikai. And for a fairly fat price-tag at that. Yes, this was predicted in our pre-E3 GamesRadar UK podcast special, but I’m not going to bang on about that. What’s important now is what this really means. I’ve weighed it all up, and I reckon that while it could be a game-changing fortune-turner for Sony, it might also mean a quite different PS4 than the one you were expecting. And maybe a very different future for PlayStation overall.

But that’s no bad thing. Trust me.

First up, let’s appraise the pros and cons of this deal in simple bullet-points. Because everything’s easier with bullet-points. In Sony’s favour, ownership of Gaikai and access to its games distribution network would:

• Theoretically allow high-end and left-field PC games to be played ‘on’ the PS3 right now
• Potentially extend the PS3’s life indefinitely if implemented on Sony’s current home hardware platform.
• Perhaps solve the PS3’s backwards compatibility problems overnight. Don’t want to put out a time-and-cost-intensive HD remake? Run a PS2 emulator through the Gaikai network and stream that stuff out.
• Expand the PlayStation brand massively (and really, really quickly) if Sony were to bring a PS-branded gaming network to every online-enabled device

That said, potential negatives for Sony (and perhaps the gamer, depending on individual outlook) are that:

• The speed of mainstream internet connections just isn’t up to de facto streamed gaming yet
• After its recent $5.7 billion loss, a $380 million buy-out has got to have stung Sony a bit in the pocket, meaning that this deal really has to be worth it.
• Microsoft could easily buy rival streaming service OnLive tomorrow with its pocket-change, creating a similar Xbox-branded service.
• This whole thing could simply be a quite pricey damage limitation exercise

So then, interesting times incoming. My main concern right now comes more from a matter of Sony precedent than from any of the actual details of this deal. Given Sony’s current, far from un-hefty financial horrors, dropping $380 million on a developing technology which hasn’t yet found its feet or proven its place within the commercial landscape is kind of a scary prospect. Sony, let’s face it, is no stranger to costly all-eggs-in-one-basket decisions with this kind of stuff. 3D anyone? Yeah. And now is a time to be very frugal indeed in Sony Towers.

I also worry that the Gaikai buy might be more of a short-term damage-limitation exercise than a genuinely profitable advantage. Gaikai had plenty of interested parties sniffing around before this deal was finalised. It has been in the partnership business pretty much for as long as it has been around, delivering game content to a whole host of hardware and service companies, including a deal to stream games to Samsung TVs. There was every chance that a big rival was going to step up and use Gaikai to muscle in on Sony’s turf at any moment, so a defensive buy kind of made sense. That said though, streaming rival OnLive is still up for grabs, and Microsoft has very big pockets. And a much better track record with online networking. This may create no real advantage for Sony in the long-run, while still costing $380 million.

However, if Sony uses this technology smartly, it could give itself one hell of a strengthened position in the games market. But it will have to implement a less-is-more strategy, rather than Sony’s traditional approach of “This is the future, please love it because we have spent all our money on it”.

Remember the Xperia Play? Piss-poor as both a phone and a gaming device, but a very clear sign that Sony is trying (albeit currently failing) to expand the PlayStation brand beyond a simple box in the living room of the collective long-converted. With Gaikai, Sony could theoretically get its entire back-catalogue out to any online-enabled device in the world. Laptops. Phones. Tablets. PCs. MP3 players. Anything with a ‘net connection, a screen and a versatile user-interface could play everything from Parappa the Rapper to The Last Guardian (if it ever comes out). That's one hell of an instant jump in brand awareness and profit if it works, and it would put Sony in one hell of a hot position for the start of the next-gen console war.

And as for the next-gen console war...