Sony buys cloud gaming service Gaikai. What will it do with the tech?

About a week before E3 2012 started in June, I reported on a rumor saying that Sony was looking to buy a cloud gaming service, either OnLive or Gaikai. At the time I didn't give the rumor much credit but I guess I should have, since Sony has announced that it is indeed acquiring Gaikai for $380 million.

Now the question is, what will Sony do with this technology? Thus far they're being fairly vague. In a press release Sony Computer Entertainment President and Group CEO Andrew House offers these quotes:

"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 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."

That leaves open a lot of possibilities and I've seen speculation that Gaikai's technology will be used for anything from game demos to offering backwards compatibility for the next Playstation.

"A variety of internet-connected devices" suggests to me that Sony is thinking beyond the Playstation hardware. The problem with using Gaikai for backwards compatibility is that it requires users to re-purchase their old games, unless Sony figures out a way customers can convert physical media to a cloud-based license. People want backwards compatibility because they want to keep playing the libary of games they already own, without paying for them again.

What I'm envisioning is pretty much a direct rival to OnLive. I think Sony Cloud Gaming (I made up that name, just to be clear) will be an app/service that you see cropping up on Sony TVs, Sony tablets, Sony phones and yes, on Sony gaming hardware as well. It will be a supplement to Sony's core Playstation department, not a replacement for it. I envision customers subscribing to it, a la Netflix or OnLive's PlayPack, and on the Playstation hardware I can see it being thrown in as a perk for Playstation Plus subscribers.

Some pundits are calling cloud gaming a disruptive technology and think Sony is really going to shake things up via this deal. I'm not as sure. Cloud gaming is a nice feature for casual gamers but the slight latency introduced by the trip to and from the data center is enough to put off most core gamers I know. Until high speed broadband becomes more ubiquitous I think cloud gaming will remain an extra feature, not a console replacing service.

On the other hand, if Sony started offering a "Playstation 2 Classics" cloud service that gave me access to 50 or 100 great PS2 titles for $9.99/month, I'd be pretty quick to sign up, at least for a little while. Put that service on my Playstation Vita and I'd be even more excited.

Anyone else care to throw out a prediction on what Sony will do with Gaikai? Please leave a comment!

Read more of Peter Smith's TechnoFile blog and follow the latest IT news at ITworld. Follow Peter on Twitter at @pasmith. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.

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