Sega, Microsoft eye cloud gaming alliance

Sonic the Hedgehog could soon be coming to a cloud near you.

Japanese game maker Sega said Monday (November 1) that it was exploring an alliance with Microsoft.

That would see it develop big-budget titles for the U.S. giant's cloud gaming service.

Shares in Sega Sammy Holdings - its full name - jumped 5.5% following the news.

Microsoft's cloud gaming initiative is available via the Xbox Game Pass on various platforms.

It removes the need for bulky hardware, but does require a fast internet connection.

The firm's focus on online services comes amid signs that its latest Xbox console is losing out to Sony's PlayStation 5.

Sega abandoned its own consoles business after a string of flops.

Now a tie-up could go deeper than cooperation.

It's long been rumoured that Microsoft could bid for Sega, with the pair having a long history of partnership.

Any such deal could strengthen Microsoft's position in Japan, which is the world's number-three gaming market, but a weak spot for the U.S. firm.

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