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PlayStation Now: The Beginning of the End for Console Gaming?

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With the new PlayStation Now, Sony (NYSE: SNE  ) is first out of the gate with a cloud-based streaming game service that changes the rules of the game. With a distribution model very similar to that of Netflix  (NASDAQ: NFLX  ) , PS Now could even herald the end of game-console hardware as we know it.

On the scene at this year's Consumer Electronics Show in Las Vegas, Foolish tech analyst Evan Niu got an up-close look at the new service. He joins Rex Moore to tell the story of what could become the "Netflix of gaming."

A full transcript follows the video.

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The immersive gaming experience is just one reason you know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.

Rex Moore: Evan, you saw some interesting stuff with Sony. Tell me about that.

Evan Niu: Sony announced the PlayStation Now. It's a new game streaming service that looks pretty interesting. Sony bought a company called Gaikai back in 2012 -- a streaming company -- and now they're finally going to launch the service. It allows you to stream PlayStation 3 games to TVs, smartphones, and tablets, and it's all based on the cloud.

It's a pretty impressive performance. For a game that's really graphically intensive -- 3D stuff -- streaming completely from the cloud and being able to control it, it was pretty impressive. You would expect some performance lags, and in some cases if you don't have a good connection you might see some, but if you have a pretty solid connection, it's actually a pretty good experience.

They're going to be testing out different pricing models, like renting versus subscription, so they're still going to try to figure it out there. This isn't something that Microsoft  (NASDAQ: MSFT  ) (with Xbox) has done yet, in exactly this way, so I think it's going to put some heat there.

Moore: As the performance does get better -- and we know it will, over time, on things like this -- are we looking at the demise of console gaming?

Niu: I wouldn't go that far, but it definitely removes the need for having the actual hardware console, so that definitely is a long-term possibility because eventually, if they can get this performance good enough, you could do away with the hardware -- keep all the hardware in the cloud and virtualize everything -- just stream it.

Then if you could build this new model on it, how to monetize it, if you can generate recurring revenues as a subscription ... it's kind of like the Netflix of gaming.

Moore: Yes, that's true. Okay.

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  • Report this Comment On February 10, 2014, at 9:43 AM, masterimmortal wrote:

    It's always going to come down to $$$. Even with the popularity of Netflix, there's no way it could sustain the industry. There still has to be other revenue streams for all those movies and TV shows to make them affordable.

    I don't think there will be enough console gamers willing to embrace digital only games at $60 a pop. And certainly not when they will be eating up 20-40 gbs of storage and bandwidth per download.

  • Report this Comment On February 10, 2014, at 1:37 PM, JoeLemon wrote:

    First? You know there was already a company that tired this and failed. There is to much lag when you play a game like this.

  • Report this Comment On February 10, 2014, at 2:09 PM, ShadowOfTheVoid wrote:

    PS Now will at best be an ancillary service, one that has no chance of seriously upsetting the status quo. The sorry state of internet infrastructure in America (still the biggest market for video games) is the biggest obstacle. Data caps and slow download speeds means that only a small handful of people will be both willing and able to use this service. Streaming games provides an even biggest obstacle if the game is an online multiplayer title. You think lag is bad now? Just you wait.

    Just because Netflix and PS Now are superficially similar in that they're both streaming services doesn't make them identical. What works for one medium may not work for others. And besides, Netflix hasn't exactly kept Blu-ray from continually growing, because it's not really a replacement for physical home video formats.

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Rex Moore

Rex Moore spent his formative years in Texas, and fought beside Davy Crockett at the Alamo. He currently travels the globe for TMF, bringing back video reports on conferences and companies that matter for investors.

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