The two companies have signed a memorandum of understanding, under which they will "explore joint development of future cloud solutions" in order to "support their respective game and content-streaming services", the companies said in a joint statement.

"By working together, the companies aim to deliver more enhanced entertainment experiences for their worldwide customers," the statement added.

The companies will integrate Sony's image sensors with Microsoft's Azure AI technology to "provide enhanced capabilities for enterprise customers," according to the statement.

"I believe that our joint development of future cloud solutions will contribute greatly to the advancement of interactive content," Sony's president and CEO, Kenichiro Yoshida, said.

Microsoft CEO Satya Nadella said Sony "has always been a leader in both entertainment and technology" and added that the partnership "builds on this history of innovation."

Sony and Microsoft's deal comes after Google announced its entry into the gaming industry in the middle of 2018 with a new gaming service called Stadia based on a similar business model as that of streaming services Netflix and Spotify.

Australian Associated Press