While the long-documented rivalry between Microsoft and Sony may not be over, it does appear that the two companies have realized that in certain areas they are stronger together. In an unexpected announcement, Microsoft and Sony revealed that they had partnered to develop new cloud gaming and streaming technologies. The implications are intriguing, to say the least, and it could mean big things for both Microsoft's next-generation Xbox consoles and Sony's next-generation PlayStation, which we'll refer to as the PlayStation 5 for now, though it remains officially unnamed.

Sony and Microsoft's cloud gaming partnership explained

Through this new partnership, Microsoft and Sony will "explore joint development of future cloud solutions in Microsoft Azure to support their respective game and content-streaming services." This now gives Sony access to Microsoft Azure data centers across the world, which Microsoft has been using for its Project xCloud streaming service.

If you're unfamiliar with Microsoft Azure, it is a Microsoft owned and created cloud computing service that allows first and third-party developers to deploy other digital services through Microsoft's data centers around the world. One such service is Microsoft's own Project xCloud, a way for people to stream their favorite Xbox games to smartphones and tablets without the need for powerful consoles or PCs.

What this may mean for PlayStation 5

Compared to its gaming competition in Microsoft and now Google Stadia, Sony falls behind in one notable category: cloud computing. The company does have PlayStation Now under its belt, but as a streaming service it is leagues behind the types of technologies that Microsoft and Google are working on — not to mention PS Now can only stream games to a PlayStation 4 or PC. The only other game streaming service that Sony is working with is PS4 Remote Play, and because it is not cloud-based, is supported on a limited number of devices, and streams from your console, it's vastly inferior to the other aforementioned services.

Sony currently falls behind in one notable category: cloud computing.

With the current console generation likely nearing its end within the next couple of years, that means the PlayStation 5 will pick up with an even stronger focus on cloud gaming technologies. Sony effectively confirmed as much in its latest investor relations (IR) day. In the presentation, the company specifically noted that one of its long-term goals was to utilize its partnership with Microsoft in ways that will directly benefit the cloud streaming capabilities of its next-generation PlayStation.

Sony notes that its vision for streaming includes "a massively enhanced PlayStation community where enriched and shared PlayStation experiences can be seamlessly enjoyed independent of time and place – with or without a console." You'd think the "with or without a console" part would indicate the lessening importance of strong hardware in the case of the PS5, but I believe Sony is merely expanding its possible markets. Hardware is vitally important, and this appears to be evidenced by earlier reports that the PS5 will not be a digital-only machine and will still support physical game discs.

So streaming doesn't necessarily hurt the PS5's importance, despite claims that hardware is a dying breed and the future will be all digital streaming. Cloud-based solutions do mitigate the need for console hardware, but this isn't a zero-sum game. Sony is looking to ensure that PlayStation remains a relevant piece of hardware while simultaneously opening up the possibilities of streaming to a wider amount of platforms. With the right technology, Sony could create a service to rival Project xCloud or Google Stadia with its own exclusives.

And not only does this partnership open up possibilities in streaming, it also implicates that the two companies could work closely together on other efforts going forward. Maybe the days of cross-play being a rarity will be a thing of the past. This is all merely speculation, but it would be wonderful for next-generation PlayStation and Xbox users to bridge the gap and start playing with one another in multiplayer games.

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