Gaikai and what it could mean for PlayStation's future

Acquisitions always point towards the future. Two companies merge with the hopes of making something that neither could do alone. Some have been tremendous successes (Google and Android), while others have been quite disastrous (Time Warner and AOL). Sony's acquisition of Gaikai might not have been the biggest surprise, with many expecting an announcement during Sony's E3 keynote. However, today's announcement is still no less important. If Sony plays its cards right, its acquisition of Gaikai will be the smartest move its made in years. The original rumor suggested Gaikai tech could be used to stream PS1 and PS2 games to PS3. While launch consoles had backwards compatibility included, the feature was eventually removed as part of cost-cutting measures to move the console away from its lofty $600 price point. Presumably, by using Gaikai tech, Sony consoles would be able to stream legacy titles that would otherwise not play on the most recent PS3 models.

Gaikai streaming World of Warcraft to an iPad

Of course, it's unlikely that Sony would shell out hundreds of millions of dollars to have PS2 games running on the PS3. It's clear that the purchase points to a far more ambitious strategy. Many PlayStation gamers have amassed quite an extensive collection of games via the PlayStation Network, from download-exclusive titles like Journey to full retail titles like Mass Effect 3. Unfortunately, as it currently stands, none of these games will be playable on the next-generation PlayStation. Due to a switch in chip architecture tech, the digital library you've collected on the PlayStation Network will be meaningless--the consumer backlash would make the PSN breach seem like a minor hiccup in comparison. Sony's move to a more developer-friendly PS4 makes a lot of sense: it will allow their next console to launch at a more affordable price, and will ensure PlayStation games can run at parity with anything Microsoft offers. However, it also undermines the value of the PlayStation Network--and losing those customers will be far more financially devastating. Cloud streaming tech helps alleviate Sony's next-gen hurdles by giving the company a way of delivering PlayStation Network games without shoving a Cell chip into the PS4. These games wouldn't be running natively on the PS4; instead, they'll be streamed to the console. The value of a consumer's PlayStation Network library would be maintained. By further embracing Gaikai's streaming tech, Sony could extend the reach of the PlayStation Network beyond just PlayStation devices. The company is already trying to make inroads with initiatives like PlayStation Certified Devices on Android, and PlayStation Mobile (formerly known as PlayStation Suite). Unlike Nintendo, Sony wants to open up its ecosystem to third-party devices--even if it hasn't managed to do so in a meaningful way yet. In the future, Sony (or a third-party partner) could make an LTE-powered successor to the Xperia Play. Based on my experiences with OnLive on WiMAX, it's clear that LTE will offer enough speed to properly run console-quality gaming experiences on the go. Imagine if the legacy PlayStation Network content you purchased on your PSP and PS3 suddenly became available to you on your mobile phone. Imagine if the Vita games you purchased on PSN suddenly became available on your Android tablet. All of a sudden, you have even more reason to purchase content on the PlayStation Network--and Gaikai tech could provide the backbone for all these new transactions.

PlayStation Certified Android devices like this Xperia Ion 4G LTE have a lot to benefit from Gaikai tech

Sony has a lot to gain by executing an ambitious cloud-based strategy for PlayStation. However, the company has a long history of having great vision--and terrible execution. Remember how PSP was supposed to be Sony's next Walkman? The company launched a portable music, movie, and game machine years before Apple's iPod Touch... but you know how the story ended up. Gaikai could be what Android was to Google--but only if it has the vision to try something truly extraordinary.