Microsoft, Sony partner on streaming games, chips and AI

Microsoft Corp and Sony Corp on Thursday said they struck a strategic partnership in which Sony would use Microsoft’s cloud for streaming games and media and the two would work together to develop image sensors. The deal is in its early stages, with many specifics yet to be determined. But the owners of two major consumer interactive entertainment franchises – Microsoft’s Xbox platform and Sony’s PlayStation – would collaborate to stream games and content to consumers and offer game makers new development tools.

“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,” Sony Chief Executive Kenichiro Yoshida said in a statement. “I believe that our joint development of future cloud solutions will contribute greatly to the advancement of interactive content.” Sony shares jumped nearly 11 per cent as Asian markets opened. Microsoft’s stock closed up 2 per cent on Thursday.

Sony’s deal with Microsoft comes at a time when the Japanese firm’s gaming business is losing some steam as its PlayStation 4 (PS4) console nears the end of its life. Analysts widely expect Sony to launch a next-generation console in 2020 to replace the five-year old PS4, but for this year at least Sony has flagged a drop in profit. For Microsoft, the deal bolsters its Azure cloud computing business, which helped push its market value past $1 trillion last month. It also helps the Redmond, Washington-based company counter cloud-market leader Amazon.com Inc’s Amazon Web Services.