SEGA and Microsoft in a Strategic Alliance to create New Strategic Titles for SEGA and establish a Next-Generation Development Environment

Even as the whole world continues to struggle to move on during this global COVID-19 crisis, Japanese video game business icon SEGA remained bullish and it made its biggest business announcement in a long time yesterday by declaring that it has agreed with Microsoft to engage in a strategic alliance related to game development and cloud gaming with the whole world in mind.

To put things in perspective, posted below is an excerpt from the official press release SEGA published on its website. Some parts in boldface…

SEGA Corporation (hereinafter referred to as “SEGA”) and Microsoft Corporation (hereinafter referred to as “Microsoft”) have agreed in principal, a strategic alliance that explores ways for SEGA to produce large-scale, global games in a next-generation development environment built on Microsoft’s Azure cloud platform. The alliance would form a key part of SEGA’s mid to long-term strategy, allowing the business to move forward with “Super Game”, a new initiative for developing new and innovative titles where the key focuses are “Global”, “Online”, “Community” and “IP utilization”.

With the world now more connected than ever following the widespread deployment of 5G and cloud services in recent years, consumers can more easily enjoy high-quality entertainment content at any time. Within this highly connected environment, the ecosystem surrounding the games industry continues to evolve and expand as more sophisticated tools and technologies become available. As such, video games continue to grow as a major medium for gamers globally, with access to a vast range of gaming experiences and communities becoming more diverse and attainable. This proposed alliance represents SEGA looking ahead, and by working with Microsoft to anticipate such trends as they accelerate further in future, the goal is to optimise development processes and continue to bring high-quality experiences to players using Azure cloud technologies.

Microsoft and SEGA have agreed upon the foundation for this alliance and through mutual cooperation, will look to build further technological evolutions with areas such as the network infrastructure and communication tools required for global online services being a key priority. Additionally, by shifting to a next-generation development platform, SEGA can effectively adapt to diversfying work styles and potential infrastructural changes.

Wow! The press release can be a bit challenging to understand in just one reading. To say the least, this is SEGA’s way of expressing that is modernizing itself to keep up with the times and ensure they can be flexible not only with developing their games and projects but also to be able to reach as many customers they can worldwide with the help of Microsoft’s Azure cloud platform.

While SEGA today is no longer the aggressive arcade, console, handheld and game maker it used to be, it has no intention of fading away. As a business entity, they may not be cash-rich anymore but they are rich in terms of intellectual properties that include famed game franchises like Virtua Fighter, Daytona USA, Sonic the Hedgehog and more. They can still do something new and productive with those.

While the press release does not specifically state anything about Xbox, it still confirms SEGA’s business partnership with Microsoft goes to a much higher level with the future in mind. Even without any mention of Xbox and its related services in SEGA’s press release, I would not be surprised to see SEGA release more games – both classic and new – on the Xbox platforms as well as on Xbox Game Pass (XGP) over the next few years. Also it is nice to see the Japanese corporation confirming next-generation development of games!

Take note of the big significance of SEGA releasing Phantasy Star Online 2 (PSO2) on Xbox One in 2020. PSO2 on Xbox One marked the first time the game got released outside of Japan starting with North America in April 2020 and with Europe in August 2020. Through the Xbox One and the Windows PC platform (August 2020), PSO2 further reached even more gamers worldwide.

By now, SEGA realized that to grow as a business, they will need to reach out to the many consumers worldwide who are willing to pay for their games and online services. In order to achieve that, SEGA partnered with Microsoft whose cloud computing infrastructure and cloud gaming models are so advanced, even competitor Sony partnered with the American corporation.

Think about that! Two of Japan’s major corporations partnered with Microsoft whose Xbox consoles did not sell much in Japan. Rivalries in video gaming were set aside for something much better between the corporations – business partnerships driven by advanced technologies that can help the partners achieve growth and breakthroughs with the whole world in mind. In the case of Microsoft, the new business partnership with SEGA is an opportunity for them to build up trust with other Japanese businesses who share similar interests with the company of Sonic and the company of PlayStation, as well sharing their objectives of achieving business growth and reaching out to consumers around the world.  

Going back to the SEGA-issued press release, posted below is an excerpt from comments made by SEGA Corporation President and COO Yukio Sugino. Some parts in boldface…

We are very pleased to announce today that we are considering a strategic alliance with Microsoft to help develop SEGA’s new “Super Game” initiative as well as build a next-generation game development environment. By considering a strategic partnership with Microsoft, we seek to further advance our game development so that our titles can be enjoyed by fans all over the world; in this regard, we aim to build an alliance that utilizes both SEGA’s powerful game development capabilities and Microsoft’s cutting-edge technology and development environment.

In closing this piece, posted below are Xbox-related videos for your viewing pleasure.

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