NEA Blog

Sony to Acquire Gaikai: Bringing Cloud Streaming Capability to Sony

Today Sony announced that it will acquire Gaikai, the fastest interactive cloud gaming delivery network. Often referred to as “Netflix for gaming,” Gaikai has revolutionized the delivery of high-fidelity, two-way interactive streaming content by leaping the latency gap, allowing users to get the same experience instantly through a web browser as on a local gaming machine. What this means is that consumers are able to play, demo, and purchase the best and biggest titles on any web-enabled device without a single download – no waiting, just play. The world got a sneak peak of what’s possible at the Google I/O keynote a few days ago with the integration of Gaikai’s amazing capability with Chrome.

The strategic significance of this transaction within the gaming and interactive entertainment sector is akin to Apple's launch of iTunes years ago in the music space—it will no doubt provide new opportunities and shift the dynamics in an ecosystem that includes game platforms, publishers, developers, TV manufacturers, cable and broadband operators, mobile devices, graphics chip companies, and content distribution networks.

From a consumer perspective, it’s thrilling to see interactive cloud delivery of video games taking off. One can imagine playing all the great titles anywhere from any device connected to the Internet – similar to the way we consume music and movies today.  In addition to the pure super-low latency streaming capabilities, Gaikai’s technology can amplify existing gaming consoles by creating a local display and interaction point where additional compute and rendering capabilities, upgrades, etc. can be provisioned automatically in the network. This is a new way forward and we can re-imagine how core games can be developed to be on-demand and even more immersive, social, and accessible. It’s a credit to Sony that they see where gaming and other interactive entertainment is headed and are stepping into a leading role in that transformation.

As investors, we see Gaikai as part of a new wave of companies utilizing an exceptionally high-performance, low latency, and geographically distributed network infrastructure. As companies like Gaikai, CloudFlare, Blue Jeans Network, Splashtop, Conviva, and others are demonstrating, not everything fits into the EC2 model and sometimes real engineering is required. And it takes guts to do hardcore engineering work in an environment (heavily influenced by the social layer) that favors centrality and compatibility, often at the expense of performance.

Gaikai’s infrastructure is a highly distributed one, spread among many data centers around the world. This is key, because when people are interacting heavily with an app, delays in response (also called latency or “lag”), can make the whole experience frustrating or unusable. The only way to pound out the latency problem is to get the computing reasonably close to people – essentially, you have to create a content distribution network (CDN). And while cloud computing is in the limelight, especially when it comes to social media consumption, the CDN side is intensely important, too. And it’s no plug-and-play deployment to get the kind of performance needed for real-time, interactive content delivery. (Ask Facebook.)

It’s been wonderful to partner with David Perry, Rui Pereira, Mark Anderson, Robert Stevenson, Ueli Gallizzi, Brendan Iribe, and the team as they built the next-generation fabric of interactivity, solving the intractable challenge of latency with display-over-IP technology and making high-performance gaming-as-a-service a reality. When it comes to world changing innovation, they nailed it! We’re excited to see continued mainstream adoption of Gaikai technology as the backbone of next-generation consoles and cloud entertainment services.