Sony’s $380 Million Gaikai Acquisition Validates Streaming Gaming Strategy

Sony’s decision on Monday to purchase cloud-streaming game provider Gaikai for a cool $380 million could completely reshape the way Sony interacts with the lucrative gaming market.

Gaikai likes to describe itself as Netflix for gaming, and that’s as good a descriptor for the Orange County, Calif.-based company as any. Users of the free, ad-supported Gaikai service can play top-of-the-line video games on pretty much any Web-enabled device – including desktop browsers, Internet TVs, tablets and smartphones. Gaikai promises to deliver a low-latency experience in gameplay even on platforms not necessarily built for gaming.

New Ways to Deliver Games

The potential for this acquisition is immediately obvious: Sony can use the Gaikai network to push games to users who want to play buy may not have access to a dedicated high-end gaming console.

That was certainly the perception of investor Paul Hsiao, whose NEA venture firm has been a Gaikai funder. “It’s fairly straightforward,” Hsiao told ReadWriteWeb, “Sony is looking to take a leadership position in gaming content delivery.”

But the implications go beyond Sony’s competitive positioning. Cloud streaming services such as Gaikai and remote desktop service Splashtop are fast becoming popular ways to deliver digital content across the Internet. Sony’s acquisition of Gaikai clearly validates cloud streaming as a delivery method.

Not a Threat to Console Gaming

Some question whether the deal poses a threat to dedicated gaming consoles, most particularly the upcoming PlayStation 4. That seems unlikely, though.

Even though a cloud-based content delivery system would enable Sony to deliver a lot more content to a lot more devices, it doesn’t negate the need for a dedicated gaming device with built in power and speed. Hard-core gamers, after all, won’t be satisfied with a “low-latency” delivery service when they can thrash out on a real console.

What this acquisition could do is let Sony stream games to other company’s boxes, such as the Apple TV, Roku or Nexus Q.

A Low-End PlayStation?

It also allows for the possibility that Sony could release its own lower-end gaming machine, perhaps a set-top box that taps into Gaikai’s network to open up a whole new sector of customers unwilling to fork over the bigger bucks for a full-blown PlayStation III console.

Whatever route the company takes, the Gaikai acquisition clearly expands Sony’s gaming model options. One way or another, streaming games from the cloud will offer new paths to more customers.

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