In May, Sony CEO Kenichiro Yoshida faced his counterpart at Microsoft, Satya Nadella, on the sprawling campus in Redmond, Washington, that houses the world's largest software maker.
The meeting was the culmination of highly secretive talks about a joint venture in a market where they had previously been fierce rivals: video games. For nearly two decades the companies' consoles -- Sony's PlayStation and Microsoft's Xbox -- have competed for space in living rooms around the world, investing billions in technology and intellectual property to win over gamers. But, on May 17, the pair announced that they would now be collaborating, developing game and media streaming services based on Microsoft's Azure cloud computing platform.
The partnership even took company insiders by surprise.
"It was really shocking to see Yoshida and Nadella shaking hands," one executive at Sony Interactive Entertainment, the Japanese electronics and entertainment conglomerate's gaming unit, told the Nikkei Asian Review.
Once unimaginable, the tie-up between the two rivals was driven by a looming disruption to their console businesses, as the $130 billion video game industry finally faces its "Netflix moment." Just as the TV and music businesses have been reshaped by the streaming boom that has replaced CDs and DVDs with subscription services, advances in cloud computing could change how games are delivered to consumers, eroding -- or even entirely destroying -- the market for physical consoles and expensive downloads.
"It will have a profound impact on the industry in the next three to five years," said Luke Alvarez, founder and managing partner of Hiro Capital, an investor in gaming and esports startups. "It will open up the ecosystem. ... Companies will have to adapt."