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Sony's Deal With Microsoft Blindsided Its Own PlayStation Team


 


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 4 weeks ago '09        #1
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Tiko377 1996 heat pts1996
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Sony's Deal With Microsoft Blindsided Its Own PlayStation Team
 

 
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 f*ghting the U.S. software giant in the $38 billion video game console market.

Last week, the companies announced a strategic partnership to co-develop game streaming technology and host some of PlayStation’s online services on the Redmond-based company’s Azure cloud platform. It comes after PlayStation spent seven years developing its own cloud gaming offering, with limited success.

Negotiations with Microsoft began last year and were handled directly by Sony’s senior management in Tokyo, largely without the involvement of the PlayStation unit, according to people familiar with the matter. Staff at the gaming division were caught off-guard by the news. Managers had to calm workers and a*sure them that plans for the company’s next-generation console weren’t affected, said the people, asking not to be identified discussing private matters.

That difficult moment is part of a painful lesson that Sony and many other technology companies are facing as the world’s leading cloud-computing providers become more powerful. If you aren’t spending billions of dollars a year on data centers, servers and network gear, you can’t keep up.

Faster internet speeds are starting to allow games to be played remotely without the need for a local machine. That’s a threat to PlayStation, which generates a third of Sony’s profits. Microsoft’s Xbox faces a similar risk, but the software giant has the second-largest cloud service, so it has a strategic answer. The other leading cloud providers, Google and Amazon.com Inc., are building their own cloud-gaming services.

Realizing that his home-grown cloud service isn’t going to cut it, Sony Chief Executive Officer Kenichiro Yoshida is being forced to collaborate, rather than confront his old gaming nemesis.

“Sony feels threatened by this trend and the mighty Google, and has decided to leave its network infrastructure build-up to Microsoft,” said Asymmetric Advisors strategist Amir Anvarzadeh. “Why would they sleep with the enemy unless they feel threatened?”

Sony jumped 9.9% on Friday, the most in 18 months. The company also announced a record share buyback, but analysts pointed to Yoshida’s speed in responding to a shifting video-game industry as a positive factor.

This shows "a new Sony" and should be applauded by investors, SMBC Nikko Securities Inc. analyst Ryosuke Katsura wrote in a report. “Management is adapting rapidly to change."

A Sony spokesman confirmed that talks with Microsoft began last year, but declined to provide further details.

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," said David Cole, founder and chief executive officer of DFC Intelligence.

The company’s other online game service and main cash cow, PlayStation Network, enables multiplayer matches of games running on PlayStation 4 consoles. For now that is still hosted by the other giant of cloud computing: Amazon Web Services. Sony and Amazon held talks last year for a deeper collaboration on cloud gaming, but couldn’t agree on commercial terms, according to a person familiar with the matter. That led to Sony’s discussions with Microsoft, the person said. Amazon is currently developing its own cloud gaming service, the Information reported last year.

The pivot toward Microsoft was preceded by several key personnel changes at Sony, including moving some senior PlayStation Now staff to other divisions, the person said. PlayStation boss John Kodera, who rose through the ranks running the network side, was also replaced in February, a little more than a year after taking the top job.

The key question is who really wins from the partnership. Most analysts agree that, at least in the short-to-medium term, it’s a positive for Sony. Cloud gaming isn’t ready for prime time yet. When Google unveiled Stadia in March, some users reported mixed results including delays in registering actions and reduced graphics quality.

Cloud gaming will account for just 2% of the industry’s revenue by 2023, according to IHS Markit. That’s why Sony and Microsoft are moving ahead with their next-gen consoles, expected next year. Securing access to Azure gives Yoshida a powerful hedge against a future scenario where cloud gaming does end up making consoles obsolete.


Microsoft may come out an even bigger winner. The Xbox unit continues to churn out games and consoles, but is now increasing focus on ways to sell more cloud software. In March, it announced a lineup of services for game development and cloud hosting that it’s hawking to game companies of all sizes. Landing console king Sony makes it more likely that Azure, and not Amazon or Google, becomes the industry standard for cloud deployment.

"Microsoft is the clear winner that Sony picked their technology even though they are a direct competitor in the gaming space," said DFC’s Cole.

Over the long-term, some are warning Sony could be the loser. Currently it charges publishers like Electronic Arts Inc. and Capcom Co. up to 30% of sales made through PlayStation consoles. But if streaming takes off, it will have to compete against Microsoft while paying its rival for cloud access. That could leave Sony struggling to stand out both on technical and pricing terms.

"This move raises some serious questions about its future dominance," said Anvarzadeh of Asymmetric Advisors.

It’s also unclear how antitrust regulators will respond to two of the three players in the console market teaming up to develop a key technology, especially as it involves the world’s largest company by market value. Cooperation by the No. 1 and No. 2 in any industry -- say AT&T Inc. and Verizon Communications Inc. -- to the determent of rivals would likely prompt push-back.

Regardless of when and if cloud gaming takes off, securing exclusive titles will continue to be critical for Sony, according to Piers Harding-Rolls, IHS Markit’s head of games research. Similar to how Netflix Inc. f*ghts Prime Video while relying on Amazon for cloud hosting, and how Apple Inc. competes against Samsung Electronics Co. while buying its components, Sony’s core strategy of accumulating a strong lineup of games remains unchanged.

"Exclusive content remains key," said Harding-Rolls.
visit this link https://www.bloomberg.com .. aystation-team
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48 comments for "Sony's Deal With Microsoft Blindsided Its Own PlayStation Team"

 4 weeks ago '09        #2
DEATH 71 heat pts71
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Clifts
+4   

 4 weeks ago '04        #3
thegod 
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 death said
Clifts
Sony was shook at the future of cloud gaming and the fact that the big boys (Amazon, Google, and Microsoft) will leave them behind since they can't compete with them and their gazillion data centers compared to what Sony has, which is not remotely in the same league, and has had complaints on its performance.

They tried to holla at Amazon buy couldn't agree on terms. They collaborating with MS to host some of their services.

The PlayStation n*ggas ain't get an invite to the table for the meeting with MS and were shocked at the announcement, and there were concerns about their future inside that division
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 4 weeks ago '17        #4
Cant Read Shit 11 heat pts11
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 death said
Clifts

the same way MS bailed apple out in the 90s, playstation is bailing out xbox in 2019
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 4 weeks ago '05        #5
WCIB 125 heat pts125
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 4 weeks ago '17        #6
Naga Sadow 44 heat pts44
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Despite the fact that I'm not a fan of cloud gaming this is a much better deal for Sony. It's known that PS Now is trash and they need major help on the back end. Azure is very well proven, we actually use the service at work, and widely established around the world. This should greatly increase quality and decrease latency.

Now we just need broadband services to get better.
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 4 weeks ago '04        #7
GetEmDaddy902 25 heat pts25
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 Cant Read sh*t said
the same way MS bailed apple out in the 90s, playstation is bailing out xbox in 2019
Clearly didn't read
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 4 weeks ago '10        #8
Hovi Bryant 682 heat pts682
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I hope Stadia does really well. Make the landscape interesting again.
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 4 weeks ago '04        #9
Tha754kid 1 heat pts
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Its like KD.... if you can't beat'em, join them




Welcome to the team, Sony
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 4 weeks ago '04        #10
goodi 3 heat pts
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Azure making all types of bread for MSFT; when the Windows phone tragedy happened i was invested in that sh*t and now my shares have grown exponentially.
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 4 weeks ago '17        #11
Naga Sadow 44 heat pts44
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 Cant Read sh*t said
the same way MS bailed apple out in the 90s, playstation is bailing out xbox in 2019
With the amount of money Microsoft has the last thing they need from Sony is help. Microsoft has nearly 3 times the total worth of Sony in cash alone.
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 4 weeks ago '17        #12
Cant Read Shit 11 heat pts11
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 Naga Sadow said
With the amount of money Microsoft has the last thing they need from Sony is help. Microsoft has nearly 3 times the total worth of Sony in cash alone.

their Xbox division is struggling and their investors don't wanna put more money into it they already wanted to close the sh*t down when xbox one initially flopped


when it comes to each's gaming divisions, Sony is making more money off PSN alone than Nintendo and Xbox are making in total combined


Last edited by Cant Read Shit; 05-20-2019 at 12:18 PM..
-12   

 4 weeks ago '09        #13
Tiko377 1996 heat pts1996 OP
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 Cant Read sh*t said
their Xbox division is struggling and their investors don't wanna put more money into it they already wanted to close the sh*t down when xbox one initially flopped


when it comes to each's gaming divisions, Sony is making more money off PSN alone than Nintendo and Xbox are making in total combined
How do you Sony fanboys come up with this sh*t, Xbox Live is making great money for MSFT go look at earnings.
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 4 weeks ago '17        #14
Naga Sadow 44 heat pts44
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 Cant Read sh*t said
their Xbox division is struggling and their investors don't wanna put more money into it they already wanted to close the sh*t down when xbox one initially flopped


when it comes to each's gaming divisions, Sony is making more money off PSN alone than Nintendo and Xbox are making in total combined
Then how were they able to generate $10B in revenue for fiscal 2018? You fanboy k*ll me.
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 4 weeks ago '05        #15
Krazie 138 heat pts138
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 Tiko377 said
How do you Sony fanboys come up with this sh*t, Xbox Live is making great money for MSFT go look at earnings.
Can't read simple sentences but expect him to understand financial information?

Good one.
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 4 weeks ago '05        #16
Y.G. 27 heat pts27
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 Tiko377 said
“Sony feels threatened by this trend and the mighty Google, and has decided to leave its network infrastructure build-up to Microsoft,” said Asymmetric Advisors strategist Amir Anvarzadeh. “Why would they sleep with the enemy unless they feel threatened?”
 Tiko377 said
"Microsoft is the clear winner that Sony picked their technology even though they are a direct competitor in the gaming space," said DFC’s Cole.
 Tiko377 said
Over the long-term, some are warning Sony could be the loser. Currently it charges publishers like Electronic Arts Inc. and Capcom Co. up to 30% of sales made through PlayStation consoles. But if streaming takes off, it will have to compete against Microsoft while paying its rival for cloud access. That could leave Sony struggling to stand out both on technical and pricing terms.
Sony Stanleys will have a tough time acknowledging this. In the other thread, they swore up and down that Microsoft needed Sony for the purposes of building an Xbox cloud service.
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 4 weeks ago '04        #17
D. Norman 6 heat pts
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Didn't read, just another unhappy xbot with his purchase
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 4 weeks ago '15        #18
Minkscobar! 80 heat pts80
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fu*k cloud gaming..
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 4 weeks ago '17        #19
1Oh 8 heat pts
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These corporations give no fu*ks. Sony devs been working on that cloud tech for years, now their jobs may be in jeopardy.

Microsoft fell off with the games, but they know what they're doing when it comes to sh*t like this. You don't hear much about Xbox live being hacked or being down for longer than 6 hours.
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 4 weeks ago '18        #20
Oswaldgatesjr 22 heat pts22
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M$ making hella chess moves setting Sony a*s up to go bankrupt for taking this huge risk which benefits us and hurts them.


Ms dolla sign baby...xbox will be the one and only all in one console monopoly very very soon. Them buildings bout to get crushed.
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 4 weeks ago '05        #21
Krazie 138 heat pts138
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 Oswaldgatesjr said
M$ making hella chess moves setting Sony a*s up to go bankrupt for taking this huge risk which benefits us and hurts them.


Ms dolla sign baby...xbox will be the one and only all in one console monopoly very very soon. Them buildings bout to get crushed.
Being the "console monopoly" is literally the opposite of what they're trying to accomplish here.
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 4 weeks ago '04        #22
cuzjuan 18 heat pts18
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 Cant Read sh*t said
their Xbox division is struggling and their investors don't wanna put more money into it they already wanted to close the sh*t down when xbox one initially flopped


when it comes to each's gaming divisions, Sony is making more money off PSN alone than Nintendo and Xbox are making in total combined
STFU you sony dudes are delusional it's scary smh
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 4 weeks ago '18        #23
Oswaldgatesjr 22 heat pts22
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 Krazie said
Being the "console monopoly" is literally the opposite of what they're trying to accomplish here.

Chess nt checkers article went right over ya head
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 4 weeks ago '04        #24
gh3tto 7 heat pts
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 goodi said
Azure making all types of bread for MSFT; when the Windows phone tragedy happened i was invested in that sh*t and now my shares have grown exponentially.
see if you have your money in it then i understand ..
but these other mfs cheerleading for microsoft corporation are some goofies
getting zero dollars from bill gates but checking his pockets and celebrating


 4 weeks ago '04        #25
cuzjuan 18 heat pts18
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its funny when these convos always come up, sony dudes always wanna run go tell every one about how much sony is making, but its about games... and us xbots have never once said sony games suck... we all take the knee like GOTs, and respectfully respect your exclusives....

but it beats me why yall wanna talk money, when sony is not even considered a top 10 company.... again, respectfully when it come to money yall cant ball with MS... when they talk about big companies they mean companies like tencent, amazon, apple, google and MS.... sony is never any where in this convo…. and this is just biggest companies talk not even biggest game companies... or entertainment companies....

so yall need to stay in your lanes and keep your glouting to games/ent… don't ever speak on money when u guys are not considered the big boys...

sure gaming was a hobby for MS, but unlike sony MS doesn't need xbox. xbox is not a 1/3 of their business like its is to sony (its like a 1/5 or 1/6th of their business, you guys really need to wake up.

the report clearly said quoting analysts and bts ppl in the industry.. SONY was scared, they were shook and that's not a diss. MS was worried, so even though MS wasn't shook to worry a big giant company like MS means something. when apple or google moves, the whole industry waits to see whose next to die, again like GOT's.

the sony workers say the were blindsided and wondered what that meant for the next PS5 if that don't tell you sony guys something, I don't know what will.


you sony guys see what we are saying as a diss, a minor amount of xbots are dumb and glout (not needed, but I understand why when u have 4-5 yrs on constantly being sh*tted on by sony fan boys, so they taking shots) but majority of xbox guys are just echoing what we have been saying for the last 3-4 years when we saw MS hand in hand with XBX make dedicated moves to atleast improve our gameplay experience with live, gamepass, azure servers, cross play, back compat, x enhancements which are pretty much standard now, and last but not least pure over 6 studios, and atleast 4/6 are AAAA/AAA studios... we saw hope, drive, and motivation because atleast they addressed our concerns and made the monthly fee feel worth the wait, cause honestly the only set back with gamepass is.... unless I know before hand what I wanna play, ill have to wait 20-40 mins to d/l a game (yes I have good internet, so xplay is what I need).


I just started a gaming channel myself, and because I make beats all I had to make video was a mic and a digital audio a/d converter. what do I do, when just a few years ago to get 1080-4k u needed an expensive video a/d converter any where from 30-300$. now I just game stream to my xbox to my PC and use windows Game DVR that comes included in the xbox app on WIN10. so now depending on your video card you can record what ever resolution u want, why do u think you see a big transition from game demonstrations shift from sony to MS, basically only the paid deals still stand or most games would be shown on the X.


this deal is good for every one and ensures cross play and maybe cross plat achievements and so much more. no more hacked accounts on the reg, no more down time on the reg. more AI games for sony, more AR games for MS. more SONY and XBX older games that never got pc port now will be emulated, perfectly and no need to an update it (they can though) because like emus the resolution can be changed and graphic packs from 1st part or even noobs can be intergrated. I really don't see why yall mad unless, ur mad that what we was saying for years has come to pass... and in reality
no matter if sony does better, MS will always have a hand in their success moving forward, and bet that hand will be filled with SONY cash. (just alil realistic salt I added but no hate).


I love sony games, the only way I play them is on emus rn, but I cant wait for the day that I play ps games thru my xbox auto upgraded and uprezzed using my xbox controller... wait for it.... WITHOUT REMAPPING THE CONTROLS!!!!


so that why im happy, and re-assures me MS and sitting on they a*s and just talking, they a fu*king serious, they wanna lock down that market and are not gonna settle on just a 1/3 of the market no more... but hey if u not into the tech behind the games you wouldn't know whats going on....


ill just say microchips fu*k streaming, that's what is getting every one who makes microchips for platforms shook, why u think NVIDIA going hard on cars AI and automation and search? go read up!!!


INTEL MS and Google are the most worried by this since they are the largest platform holders that make they own chips... I pretty much know what gonna happen in the next 5 years but, ill save that for another one, im out!


SONY gets my respect but xbox got my love!

both are needed both have and give value!

PEACE OUT BROTHERS!

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