Sony and Microsoft announced on Thursday that the two companies will partner advance their direct-to-consumer entertainment platforms and AI solutions.

Under the memorandum of understanding signed by the parties, the two companies will explore joint development of future cloud solutions in Microsoft Azure to support their respective game and content-streaming services. In addition, the two companies will explore the use of current Microsoft Azure datacenter-based solutions for Sony’s game and content-streaming services.

As part of the memorandum of understanding, Sony and Microsoft will also explore collaboration in the areas of semiconductors and AI. For semiconductors, this includes potential joint development of new intelligent image sensor solutions. In terms of AI, the parties will explore incorporation of Microsoft’s AI platform and tools in Sony consumer products, to provide intuitive and user-friendly AI experiences.

By working together, the two companies aim to provide more enhanced entertainment experiences for their customers worldwide, including building better platforms for content creators, they said in a statement Thursday. The companies also may collaborate on semiconductors, potentially working on new image sensors that would combine Sony’s image sensor technology with Microsoft’s AI tools in Azure.

Sony’s PlayStation and Microsoft’s Xbox compete fiercely. At the same time, as both companies face rivals such as Alphabet Inc.’s Google, Apple and Amazon.com, Sony will want cloud horsepower to run its services. The two companies said they will share additional information in the future.

“Sony is a creative entertainment company with a solid foundation of technology. We collaborate closely with a multitude of content creators that capture the imagination of people around the world, and through our cutting-edge technology, we provide the tools to bring their dreams and vision to reality,” said Kenichiro Yoshida, president and CEO of Sony. “PlayStation® itself came about through the integration of creativity and technology. Our mission is to seamlessly evolve this platform as one that continues to deliver the best and most immersive entertainment experiences, together with a cloud environment that ensures the best possible experience, anytime, anywhere. For many years, Microsoft has been a key business partner for us, though of course the two companies have also been competing in some areas. I believe that our joint development of future cloud solutions will contribute greatly to the advancement of interactive content. Additionally, I hope that in the areas of semiconductors and AI, leveraging each company’s cutting-edge technology in a mutually complementary way will lead to the creation of new value for society.”

“Sony has always been a leader in both entertainment and technology, and the collaboration we announced today builds on this history of innovation,” said Satya Nadella, CEO of Microsoft. “Our partnership brings the power of Azure and Azure AI to Sony to deliver new gaming and entertainment experiences for customers.”