Gaikai is a cloud gaming company. It delivers video games to gamers all over the world using cloud computing. Its technology allows even the most graphic-heavy games like Mass Effect 3 to be streamed seamlessly via any connected video capable device including PCs, digital TVs, tablets and smart mobile devices and for gamers to play them with no lag: as if they were running them locally. At the Google I/O conference in San Francisco at the weekend, Gaikai’s founder David Perry demonstrated Epic Games’ Bulletstorm streaming through Chrome. He also showed that gamers no longer need Flash or Java to stream games and content.

For the video games industry, this acquisition is massive news. It’s also a very rough wake-up call for anyone who’s naïve enough to still think the future of games lies in anything other than digital distribution. But what’s really interesting for the games industry now is that, digital distribution is no longer solely a threat to the high street retailer, which has suffered irrevocably over the last 12 months. With the rapid progression of cloud computing technology and services, digital distribution is also now a major threat to console manufacturers because you don’t actually need a console any more to enjoy high quality, instantly-accessed, chart-topping games.

And that’s why buying Gaikai is such a smart move for Sony. It’s confirmation that one of the biggest players in the industry is so convinced its future lies in digital it’s willing to spend $380m in an attempt to become futureproof. It’s also indicative of Sony’s long term commitment to the games industry. Analysts are already predicting that the company’s next console – the PlayStation 4, which is unlikely to be released before 2014 – will be powered by Gaikai, allowing Sony to control the otherwise potentially harmful – and very likely – migration of console gamers to the cloud. In my opinion, it always makes sense to become the competition rather than fight it. A bit like Amazon’s genius launch of the Kindle. And we all know how that’s ended.

Many people believe we still aren’t ready for cloud gaming; that we don’t have enough bandwidth. But for me that’s just detail and I’d be very happy to put a large wager on cloud computing being the dominant form of video game delivery within the next five years. Roll on 2017.

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