Why Sony Acquired iSIZE

Sony is pretty hell-bent on making its cloud gaming platform work. Recently, it announced the acquisition of iSIZE, a UK-based company which specialises in deep learning for video delivery, throwing massive hints at the company’s decision to fuel its cloud gaming ambitions.

iSIZE develops AI-driven solutions aimed at providing bitrate reductions and enhancing quality in the media and entertainment sector. As Sony’s blog reads, “The acquisition provides Sony Interactive Entertainment (SIE) with significant expertise in applying machine learning to video processing, which will benefit a range of our R&D efforts as well as our video and streaming services.”

iSIZE also specialises in making photorealistic neural avatars. The team has been working for almost two years on this for 2D & 3D modelling for gaming and metaverse applications. 

The founder of the company, Sergio Grce, has been very interested in AI, along with video imaging, art, and gaming. Thus, along with Yiannis Andreopoulos, he founded iSIZE in 2016, whose expertise was in video streaming services. 

This acquisition comes in line with Sony reporting its plan in May to bolster its PlayStation division further and is looking to acquire more studios for the same. Coincidently, it has also been on an acquisition spree since 2021. 

The PlayStation team announced that it is planning an “aggressive and interesting” expansion into cloud gaming. Sony CEO Jim Ryan said, “There’s been lots of attention around cloud gaming. We observe mobility in gaming habits to be an increasingly important trend. The cloud will be fundamental in allowing us or anyone else to exploit that trend of mobility.”

Sony is actively looking for opportunities to strengthen its position in the sector, as Microsoft continues to expand its gaming presence with Xbox. The recent completion of Microsoft’s $68.7 billion acquisition of Activision Blizzard has set the stage for intense competition in the gaming industry. Sony’s latest acquisition of iSIZE is seen as a strategic response to this competitive landscape.

Cloud gaming making a comeback?

Apart from the acquisition of Activision Blizzard, Microsoft’s foray into the cloud gaming business reportedly has some serious development routes in India. A recently leaked Xbox internal document revealed that Reliance Jio has been exploring partnerships in the cloud gaming space with Microsoft in 2020. 

As per the document, in order to extend Project xCloud, Reliance Jio outlined plans to deploy xCloud servers across 27 Azure regions, encompassing both existing and upcoming locations. This list incorporated Central Indian and South Indian xCloud Servers. Microsoft has been working with Jio to bring Project xCloud into the Indian market since 2020. 

Later, the Mukesh Ambani-led firm also tried to partner with NVIDIA for its GeForce Now cloud gaming service in November 2022. But since the partnership did not work out, Jio ended up partnering with other smaller cloud providers such as Ubitus K.K. and announced JioGamesCloud. Possibly, Jio would be able to make a dent given its large audience in the cloud gaming market. 

On the other hand, Microsoft is also planning to launch PC cloud game streaming through Xbox Cloud Gaming by the end of 2028, along with leveraging its Azure servers. 

All of these developments are after Google decided to shut down its Stadia cloud gaming project citing lack of subscribers. Google’s Stadia, which initially aimed to be a first-party consumer service, ultimately pivoted to focus on a white-label cloud gaming service for developers. This shift in strategy emphasises the competitive nature of the cloud gaming market.

Can Sony work it out this time?

Amongst Microsoft, Google, and Sony taking it slow in the cloud gaming industry, NVIDIA hasn’t stopped even a bit. NVIDIA’s GeForce NOW is expanding to accommodate 15 fresh new titles on its platform, including Alan Wake 2. 

Sony started its streaming gaming service when it acquired Gaikai in 2012, through which it powered its PlayStation Vita, and now powers PlayStation Now.

Later, Sony acquired OnLive in 2015, but only to shut it down. People on X have been jokingly saying that Sony can only acquire companies that do not have a portfolio, and then shut it down. It would be interesting to see how the acquisition of iSIZE pans out. 

On the other hand, Sony has been comparatively quiet when it comes to investing in generative AI. The Sony Venture Fund has been bullish on building robots, but according to Austin Noronha, the managing director at the firm, “For AI, the way we look at the company is around how differentiated will they be compared to legacy systems or large corporations — and whether they are working on their own language models and having their application stack on top of it, versus plugging in to someone else’s.”