Sony CEO and president Kenichiro Yoshida had the chance today to explain in much greater detail the reasons that led the Japanese tech giant to the strategic partnership with Microsoft announced a few days ago. At the company's Investors Relations Day 2019, the Sony CEO replied to a question on this very topic with the following statement:
On our collaboration with Microsoft and the likely size of it we have in mind, at this point in time in order to have a broader and deeper discussion we have signed a Memorandum of Understanding. Over the long term, the cloud and streaming services trend will mature, but it is very difficult to ascertain the timeline.
We've been working with streaming services over the last five years and there are various difficult aspects. The network latency, for one. Some examples I could cite, for instance, the typical means of minimizing latency is the placement of servers on the edge closer to users, but moving servers closer to one group of users can mean increasing latency for another group of users. And also, there will be an encoding process at the very end, and how we can minimize the time for compression is another challenge. And also, in order to make it a viable business, what would be the business model? Our service is a subscription model now, but depending on the game, one could be played for fifty or a hundred hours and for someone playing one game like this, what is the advantage of a subscription service per month, the all-you-can-play type of model? So in terms of technology and services, there are various aspects we would like to look into with Microsoft going forward, especially in terms of streaming solutions. We would like to proceed through collaboration. On our side, Toru Katsumoto (EVP in charge of R&D) will be leading the initiative and continue to carry out discussions.
As expected, the goal is to leverage Microsoft's Azure infrastructure to improve the gameplay experience (particularly with regards to latency, arguably the biggest issue when streaming games through the cloud), but Sony is also looking to evaluate alternative business models for its PlayStation Now service that's currently subscription only.
To understand how critical games streaming is to Sony's overall plans for the next generation, we should also look into another answer provided by the Sony CEO, where he called the console market a 'niche'.
As we speak, we provide, as I said, the immersive business and experience is something we would like to continue to place importance on. If you look at the game industry as a whole, the console market is not a major market, rather it's a niche market if you will. But for core gamers, immersive experiences are something we would like to value. In this respect, for the time being, the console as something that brings about computing functionality to the users is very important, but on the other hand, technology will progress and so as I said today, the Remote Play and PlayStation Now, the streaming services will be worked on in parallel, that is what we are doing at this moment.
With Nintendo also rumored to be interested in providing game streaming through Microsoft's Azure cloud network and Google preparing to launch its Stadia platform, the cloud gaming revolution seems closer than ever, with only Amazon still keeping to the shadows for the time being with its rumored service.