Sony snaps up cloud gaming group Gaikai

SONY has spent $380m (£242m) on acquiring cloud-based gaming service Gaikai, the troubled electronics giant announced yesterday.

Gaikai, bought by Sony’s video game arm Sony Computer Entertainment (SCE), allows users to play high-quality games over a broadband connection without the need for downloads or powerful computers, since the games are run on remote servers “in the cloud” and are then streamed to a device.

The Californian firm’s technology could be used in Sony’s upcoming PlayStation 4 console, which is expected to be announced next year as Sony presses on with its focus on gaming.

“Gaikai’s service will allow demos and older games to play on the new console without downloads,” Nick Parker of tech research firm IHS Screen Digest told City A.M.

The purchase is Sony’s first acquisition under new chief executive Kazuo Hirai, who replaced former boss Sir Howard Stringer this year following a £3.5bn loss in the year to 31 March.

Hirai, SCE’s former president, oversaw the gaming arm of Sony becoming one of its most profitable wings while other areas slumped.

He slashed 10,000 jobs at the company shortly after taking over the top job in April and has promised to improve earnings by focusing the company on games and mobile devices.

“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,” SCE’s president Andrew House said.

Gaikai was founded in 2008 and counts Intel and Benchmark Capital, one of Twitter’s first investors, among its backers.