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Many people missed what could be one of the most significant announcements at the recent 2014 International CES in Las Vegas.
PlayStation Now is Sony's (NYSE: SNE ) literal game-changer. The streaming video game service could mark a turning point in the industry, with the introduction of a recurring revenue-based model similar to what Netflix (NASDAQ: NFLX ) offers.
A full transcript follows the video.
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Rex Moore: Welcome to the 2014 International CES. We are wrapping things up and I am joined today by Eric Bleeker, Managing Editor at The Motley Fool. We're going to go over some fun topics here today. The first one; the best of CES. What did you see out there?
Eric Bleeker: The keynote this year is Sony, and a lot of people thought that was kind of boring -- Sony is not exactly leading the technology revolutions of today -- but their CEO Kaz Hirai unveiled PlayStation Now, which is essentially a streaming, cloud-based service for video games.
They had acquired a company a few years ago, named Gaikai, and they've evidently been able to really push the technology to where now you can -- presumably the idea will be -- subscribe to their service and be able to stream older games. They have a significant back catalog between PlayStation, PlayStation 2, and PlayStation 3.
What I think is really fascinating about this, though, is you think about the value of intellectual property in video games. Think about Neflix. Netflix is a company worth $20 billion, and they have very low IP of their own. They're buying everything, right?
Let's go to Nintendo. They're worth $20 billion, and they've got $8 billion of cash in the bank. What if you were able to take a company like Nintendo, with all that IP, and create a recurring revenue-based service where people, instead of buying games piecemeal, as many people have on Wii, they just subscribe to the service.
It has the potential to fundamentally change the business of video games. Oh, and the technology is so cool it can work on other devices! Nintendo right now doesn't have a presence on smartphones? A streaming service could potentially stream to smartphones as well.
Nintendo has been very leery of doing this, but with a little ambition this company has an amazing opportunity at their feet.