While no one was paying attention, Sony may just have launched the future of the gaming industry. Actually that’s not true, Sony launched the future of gaming two years ago but it’s still too early to call it.

So here’s the skinny.

In 2014, Sony launched Playstation Now, their cloud based, game streaming service that lets users pay for access to a selection of original Playstation 2, PlayStation 3 and PS4 titles on either a per-game basis or via a subscription.

This means for example, you don’t need a PS3 console to play PS3 games anymore. With a fast internet connection and a PC or a Sony Bravia TV, you can play PS3 games once you have a PS Now subscription.

Previously, Sony allowed users to access the service via several channels - PlayStation 3, PlayStation Vita, PlayStation TV, Sony Bravia televisions and even Samsung TVs. But in February, Sony announced it would discontinue PlayStation Now on all systems except the Playstation 4 and PC.

Not many people are aware of this service and Sony doesn’t seem to be pushing it as much they do their other services.

The service currently hosts 483 PS3 titles and cloud saves for seamless play on PS4 and Windows 10 PCs. There are two ways to stream games in PlayStation Now, either as a subscription based service like Netflix, allowing unlimited access to all games covered by the subscription model, or users can rent games individually.

Why is this interesting?

I mentioned earlier that Sony doesn’t push the service as much as one would think they would (you won’t even find it on the Playstation homepage). Which suggests that Sony may be running the Playstation Now service as an experiment. They’re trying to see how viable the “Netflix” business model is. Depending on what Sony decides to do with the service three to five years from now, will have serious ramifications on the future of the industry.

Adopting the cloud based gaming model, will mean no more consumer console development for Sony. This is a highly unlikely scenario. Sony’s consoles are too much of a cash cow to be shuttered just like that.

Or are they?

According to this break down by IHS, it costs Sony $381 to create and assemble the PS4. The PS4 was selling for $399 at retail leaving Sony with a profit margin of $18. Then, we also have to consider R&, shipping, factory maintenance and management costs, advertising and taxes - suffice to say, Sony is not making anything from these devices, yet.

It took the PS3 four years to finally turn profitable, but that wasn’t before Microsoft and Sony had incurred a total loss of about $8 billion on their Xbox360 and PS3 consoles respectively.

I doubt they’ve been able to recoup that money back since both companies have released new consoles again since then both of which are selling at a loss. It’s probably going to take the PS4 equal amount of time (four to five years) to turn profit also.

This is the business model the gaming industry has been running on for years.

For years, industry experts have been clamouring the need for a new business model in the video game industry. The focus on AAA titles has put the industry in a precarious position whereby console makers try to compel game developers to go big with their releases, to try to harness as many features and capabilities out of their hardware. This creates another set of problems which I don’t plan on going into but here’s a great article on the subject.

This cloud based, game streaming service may just be the lifeline the industry needs. You can be sure Microsoft and Nintendo have been closely monitoring Sony’s little experiment. Just February, Microsoft launched its own online subscription based game service called Xbox Game Pass. The only difference is Microsoft has less titles, is only accessible via the Xbox One but it allows you to download. So it’s not really the future as one would hope.

The bets are still on Sony’s experiment.

Another reason why this is interesting is, for people like me who don’t own a PS4 or PC diehard gamers, the Playstation Now provides a great opportunity to experience the Playstation’s amazing and mostly exclusive library. It makes sense because the PS Now costs about a fifth of the price of a PS4 console (or even the price of broadband in a month (which you’re going to pay for anyway if you’re into online gaming).

In short, it’s an inexpensive and non committal way to veer into Sony’s ecosystem. It will help Sony make some extra money from the PC crowd or the nostalgic game crowd - two niches I fit into nicely. Seeing as Sony has refused to enable backwards compatibility on their newest console, the PS Now is my best bet. Well played, Sony.

Another thing, and I know I’m reaching here but humor me. If SEGA has any plans of re-entering the console market, this will be their best bet. A cloud based game streaming service is safer and cheaper for them.

Sony may have a game changer on their hands. Will the odds be in their favour?

Read more: http://techazuri.com/read/is-the-playstation-now-model-the-future-of-games-/p1wd579zyl

too long....