Market Overview

Sony Buys the Netflix of Gaming, Gaikai, for $380 Million


Sony (NYSE: SNE) has announced that it plans to acquire Gaikai, a streaming video game service, for $380 million.

Founded in November 2008, Gaikai has had a number of notable investors, including Intel (NASDAQ: INTC), Qualcomm (NASDAQ: QCOM), and Benchmark Capital. The company was co-founded by David Perry, a game developer whose former credits include Earthworm Jim and MDK.

"SCE has built an incredible brand with PlayStation and has earned the respect of countless millions of gamers worldwide," Perry, who serves as Gaikai's CEO, said in a company release. "We're honored to be able to help SCE rapidly harness the power of the interactive cloud and to continue to grow their ecosystem, to empower developers with new capabilities, to dramatically improve the reach of exciting content and to bring breathtaking new experiences to users worldwide."

Similar to OnLive, Gaikai allows its users to stream a wide variety of games to any Mac or PC. The service differs from traditional online gaming platforms, such as Steam or Origin, by providing consumers with the ability to play games without the need for massive downloads. Gaikai is somewhat unique in that it does not require its users to download an app before playing an instant demo.

"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," said Andrew House, President and Group CEO of Sony Computer Entertainment, who was also quoted in a press release. "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."

This is a change of direction for Sony, which has made billions selling -- not streaming -- games and consoles to consumers. The company hopes to turn Gaikai into a multi-billion-dollar business by using its technology to establish a new cloud service.

Unlike Netflix (NASDAQ: NFLX), however, streaming game services -- which require a strong and persistent Internet connection -- have yet to receive mainstream acceptance. "Nobody wants to be in the middle of a death match and have the game start to buffer just as they're about to make a kill," Geoff Keighley, executive producer of GameTrailers TV, told the LA Times last week.

Rumors of a Gaikai acquisition began to spread after CNNMoney reported that the company was seeking a buyer that would pay in excess of $500 million.

Follow me @LouisBedigianBZ

Posted-In: Andrew House David Perry Gaikai SonyM&A News Tech Best of Benzinga


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