Rivals in gaming, Microsoft and Sony team up on cloud services

For the last two decades, Sony and Microsoft’s gaming divisions have been locked in all-out war against one another: on price, on hardware, on franchises, on exclusives… you name it. But it seems they’ve set their enmity aside temporarily that they might better prevent that filthy casual, Google, from joining the fray.

The official team-up, documented in a memorandum of understanding, was announced today, though details are few. But this is clear enough:

The two companies will explore joint development of future cloud solutions in Microsoft Azure to support their respective game and content-streaming services. In addition, the two companies will explore the use of current Microsoft Azure datacenter-based solutions for Sony’s game and content-streaming services.

Of course there is no doubt that Sony could have gone with a number of other cloud services for its gaming-on-demand services. It already runs one, PlayStation Now, but the market is expected to expand over the next few years much like cord cutters have driven traditional TV and movie watchers to Netflix and other streaming services. Expansion would surely prove expensive and complicated.

The most salient challenger is likely Google and its new Stadia game streaming service, which of course has a huge advantage in its global presence, brand recognition and unique entry points: search and YouTube. The possibility of searching for a game and being able to play it literally five seconds later is an amazing one, and really only something Google can pull off right now.

That makes Google a threat. And Microsoft and Sony have enough threats already, what with the two of them making every exclusive and chip partnership count, the resurgence of Nintendo with the immensely popular Switch and the complex new PC-and-mobile-focused gaming market making consoles look outdated. Apple Arcade exists, too, but I don’t know that anyone is worried about it, exactly.

Perhaps there was a call made on the special direct line each has to the other, where they just said “truce… until we reduce Google Stadia to rubble and salt the earth. Also Nvidia maybe.”

We don’t actually have to imagine, though. As Sony President and CEO Kenichiro Yoshida noted in the announcement: “For many years, 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.”

Sony doesn’t lack technical chops, or the software necessary to pull off a streaming service — but it may simply make more sense to deploy via Microsoft’s Azure than bring its own distribution systems up to par. No doubt Microsoft is happy to welcome a customer as large as Sony to its stable, and any awkwardness from the two competing elsewhere is secondary to that. Google is a more existential competitor in many ways, so it makes sense that Microsoft would favor partnering with a partial rival against it.

Sony has long been in this boat itself. Its image sensors and camera technology can be found in phones and DSLRs that compete with its own products — but the revenue and feedback it has built up as a result have let it maintain its dominance.

Speaking of which, the two companies also plan to collaborate on imaging, combining Sony’s sensor tech with Microsoft’s AI work. This is bound to find its way to applications in robotics and autonomous vehicles, though competition is fierce there, and neither company has a real branded presence. Perhaps they aim to change that… together.