In Depth

Microsoft and Sony partnership: why the alliance proves Google Stadia is a real threat

Gaming rivals strike a deal to develop cloud gaming services and AI systems

Fierce gaming rivals Microsoft and Sony have formed an unlikely alliance to take on Google’s upcoming Stadia service. 

The agreement will see the two companies “develop future cloud solutions” together using Microsoft’s Azure cloud computing platform, says Gamespot

Sony will also use Azure for its “own game and content-streaming services”, and to provide “better tools” to content creators, the gaming news site says. 

Microsoft, meanwhile, has pledged to work with Sony on the development of semiconductors, which are used for processing in most electronic devices, as well as artificial intelligence (AI) systems, says Eurogamer

Sony chief Kenichiro Yoshida said: “Microsoft has been a key business partner for us, though of course the two companies have also been competing in some areas.

“I believe that our joint development of future cloud solutions will contribute greatly to the advancement of interactive content.”

Google Stadia is now a serious threat

Though Microsoft’s Xbox and Sony’s PlayStation brands were not mentioned during the deal’s announcement, it’s widely believed that the partnership will be used to spawn a video game streaming service to rival the upcoming Stadia platform from Google. 

Stadia, which was unveiled in March at the Game Developers Conference in San Francisco, is the search giant’s first foray into the gaming world. It takes the form of a subscription service, where users pay a monthly fee to stream a host of games in 4K at 60fps over the internet. 

No company has yet created a successful video game streaming service and the limited details available on Stadia, such as price and performance on low-speed internet systems, means it’s “impossible to speculate about Stadia’s impact” until it launches later this year, says Mashable

But the new partnership between Microsoft and Sony suggests that the tech giants see Stadia as a far greater threat than the gaming community suspected.

Piers Harding-Rolls, an analyst at IHS Markit, told the BBC that the partnership “is the best choice” for the two firms to maintain their position in the gaming market, despite “the competitive dynamic between Xbox and PlayStation.

“Working together they have a better chance to head off competition from the likes of Google, which has gone on to dominate the last wave of technology disruption in the mobile space alongside Apple,” he said. 

There’s also talk of Amazon entering the fray, while Chinese tech giant Tencent “is well underway with its own cloud gaming prospect”, The Daily Telegraph says. 

Plus, with Microsoft rumoured to be launching Xbox services on Nintendo’s Switch console, game companies may have to put their fierce rivalries aside to fend off competition from “wealthy upstarts”, the newspaper says. 

What does this mean for Xbox and PlayStation brands?

There’s no word on how the deal will influence Microsoft’s Xbox and Sony’s PlayStation brands, but don’t expect the partnership to result in a co-developed console. 

There are rumours aplenty about Sony’s upcoming PlayStation 5 console, which is due to be previewed later this year before going on sale towards the end of 2020. 

Microsoft has also made no secret about the development of its next line-up of Xbox consoles. Phil Spencer, head of Xbox, said at the Electronic Entertainment Expo (E3) last year that work was well under way on the next generation of Xbox systems, which are commonly referred to as the “Scarlett” series. 

But with Microsoft now laying the foundations for Sony’s cloud gaming service - along with the possible launch of the Xbox Game Pass on Nintendo’s Switch - the idea that gamers one day find themselves playing PlayStation titles on their Xbox consoles no longer seems far-fetched.

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