The PlayStation 4 Could Be Sony’s Last Video Game Console

By just about any measure, Sony's (NYSE: SNE  ) PlayStation 4 has been a runaway success. Worldwide, the video game console has sold more than 7 million units since being released last fall -- about 40% more than Microsoft's (NASDAQ: MSFT  )  competing Xbox One -- and Sony has struggled to keep it in stock.

Yet, despite its success, the PlayStation 4 could be the last of its kind. In a recent interview with Re/code, Sony Worldwide Studios President Shuhei Yoshida explained the company's desire to move away from a business model dependent on hardware.

PlayStation Now is Sony's future
PlayStation Now, Sony's cloud-based video game streaming service, is set to launch this summer. When it debuts, the service will enable PlayStation 4 owners to play older games released for the PlayStation 1, 2, and 3.

Sony's PlayStation 4 lacks the hardware and software necessary to play these games -- it isn't natively backward compatible. But by using Sony's distant servers and the power of the Internet, gamers will be able to play these older games on their new consoles. PlayStation 4 games won't be available for the service, at least at launch, though it's clear Sony eventually intends to add them.

Yoshida told Re/code specifically that Sony intends to shift toward a "service-orientated" business. That is to say, rather than sell expensive pieces of hardware (the PlayStation 4 retails for $399) and physical, disc-based games, Sony would work to make the PlayStation centered around gaming as a service.

Yoshida didn't specifically rule out the existence of a PlayStation 5, saying the company would consider such hardware if game creators eventually found it to be necessary. But if PlayStation Now goes according to plan, it won't be necessary -- with the games being played on remote servers, powerful local hardware isn't needed. In fact, Sony plans to eventually expand PlayStation Now to other Internet-connected devices, including smart TVs, smartphones, and tablets.

Microsoft has its own cloud solution
Microsoft, meanwhile, has consistently boasted about the power of its own cloud solution, while concurrently playing down the potential of Sony's competing service.

At its recent Build developers conference, Microsoft offered up an impressive tech demo demonstrating the power of its cloud technology. By taking advantage of its Azure cloud servers, game creators will be able to improve the graphical capabilities of their Xbox One games -- some of the graphics processing can be shifted to the cloud, freeing up the Xbox One's local hardware for other tasks.

In time, this sort of hybrid solution could morph into something much more akin to Sony's PlayStation Now, but at least publicly, Microsoft isn't particularly impressed with pure cloud gaming. Following Sony's PlayStation Now announcement back in January, Microsoft's Phil Spencer remarked that local consoles would still be important "for a long time."

Gaming as a service
Perhaps, but PlayStation Now's public debut is only a few months away, and the service is in private beta testing. Participants are contractually obligated not to divulge specifics, but that hasn't stopped a few leaks from surfacing. So far, reports have been fairly positive, with gamers reporting a solid playing experience.

If PlayStation Now is a success, it could be immensely beneficial to Sony -- shifting from a hardware/software business model to a cloud-based service model would open up a number of opportunities while simultaneously limiting risks.

Sony would no longer need to worry about designing, building, and shipping a new low-margin PlayStation every few years, and it could cut could out traditional retail middlemen. Regular subscription revenue would likely prove more stable than seasonal software demand.

So far, it's been a great year for Sony's PlayStation business, but with the company moving beyond its traditional business model, its long-term potential doesn't reside in the number of consoles sold.

Sony's service businesses stretch beyond gaming
The PlayStation 4 is a great video game console, but it could also soon be an ideal tool for cord-cutters, particularly as Sony looks to develop its own original programming. As more consumers cut the cord, it seems obvious that 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. 

 


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  • Report this Comment On April 27, 2014, at 2:53 AM, fr0sty wrote:

    One issue, even by the time PS5 is ready to launch, internet latency will not be anywhere near where it needs to be to satisfy core gamers. PS now is great, but it does have a slight input lag. In games like Call of Duty, that will kill you quickly. Any lag is bad.

    Not to mention, it dramatically reduces Sony's available consumer base, as only those with the best internet connections will be able to enjoy it, in addition to the latency issues. Right now, a vast majority of us earthlings do not have access to high speed, low latency internet connections.

    Plus, with their push into VR with project morpheus, that will rule out a cloud based system entirely. Morpheus needs a solid 60fps per eye with almost NO latency or you will get dizzy real fast once you start turning your head and realize the world is turning a little slower than you are, as if you were drunk and the room was spinning.

    Local rendering isn't going anywhere any time soon. The cloud is great, but not that great.

  • Report this Comment On April 27, 2014, at 3:02 AM, PowerPlayer wrote:

    It sounds as though they want to become Zynga or Facebook. That is fine, but as a PS4 customer I will use only Steam for my games if the quality of games slips one bit. I switched from Microsoft to Sony this generation because the only thing I care about is the game experience.

    Oddly enough, I pay Square Enix a monthly fee for FF XIV Realm Reborn, but Sony is reducing their stake in Square Enix. Go Figure.

  • Report this Comment On April 27, 2014, at 3:11 AM, Begotnot wrote:

    'Stupid' is all I come up with having read your article.

  • Report this Comment On April 27, 2014, at 3:13 AM, SlickR wrote:

    I'm sure these companies would love for people to pay monthly fees to play games and not be able to own games privately so we can play them whenever we want, but it won't happen.

    There is no going around latency, the information right now travels at speed of light and there is still latency between major internet servers, there is no way to fix this in the foreseeable future.

    There might be new multiway cables, but these are at least several years out and then the implementation at least additional several years, so we are talking at least 15 years with the same type of internet that we have today.

    Ultimately I think people want to own games, they don't want games to be a service, they want games to be games which they purchase and can play for the rest of their lives.

    The future no doubt is without consoles, but with PC gaming.

  • Report this Comment On April 27, 2014, at 3:19 AM, uilliam13 wrote:

    I gotta ride with the OP. between the cost of practical internet speed beyond the reach of the average consumer by far and the likelyhood of it even existing is quite a stretch.

    even so, there isn't a PC for twice the price of a console anywhere near able to handle it.

  • Report this Comment On April 27, 2014, at 3:33 AM, omega1 wrote:

    No no no, you can't fool me, I saw that Playstation 9 commercial.

  • Report this Comment On April 27, 2014, at 4:32 AM, AverageGuy wrote:

    Anybody that believes anything from motley fool is just that, a fool.

  • Report this Comment On April 27, 2014, at 4:33 AM, Nadrakas wrote:

    So...eventually games for the PS4 will be "available" online...which means that eventually you will only be able to purchase games for the PS4 online. Great...count me out.

    ~ N

  • Report this Comment On April 27, 2014, at 5:39 AM, RandomOptimist wrote:

    So basically they want to do what Steam has been doing for ages....... Congratulations, you have taken baby steps to being worth the time and effort put into you.

    Here is an idea, why not develop your portable market more. And I do not mean cellphone and Iphone games.... frankly those games are the definition of crap. I mean full blown quality titles for the PS Vita Maybe work on putting PS2 games on the Vita.... Maybe a gran turismo title for it. I think the vita can handle GT4 at this time. frankly I would love to see some more RPG titles on the thing, maybe survival horror.

  • Report this Comment On April 27, 2014, at 7:03 AM, VampiricDragon wrote:

    As usual this site posts short sighted, generalized nonsense from nobodies.

  • Report this Comment On April 27, 2014, at 7:03 AM, VampiricDragon wrote:

    PSNow is not the future. Most Analysts have it nothing but a failed expoeriment already

  • Report this Comment On April 27, 2014, at 7:15 AM, Cerberus82 wrote:

    I'll stick to my physical disc copies thank you very much. I've downloaded a few games over the years directly from Live, but after doing so I feel I would have been better off paying the few extra $s for the disc. It seems as though Playstation is shooting itself in the foot, just like Xbox did last year at E3.

  • Report this Comment On April 27, 2014, at 7:17 AM, oluseye wrote:

    most likely the PS4 will be followed by a PS4i [my guess] online game streaming machine [a la Steam Machines] that will be considerably cheaper and focused on exploiting its enviable game catalog and the potential profits from streaming classics like the FIFA series or The Battlefield series or Final Fantasy i would definitely go for that.

  • Report this Comment On April 27, 2014, at 7:34 AM, Ebby720 wrote:

    Learned long time ago, I get a physical copy from Amazon....two day prime....waiting when I get home at night on the day it comes out.....we use their shipping for everything plus downloads....then I can trade it in and get 2/3rds to half back and get myself or the kids something or even a Microsoft or Apple card at Gamestop.....streaming, I get something I have to delete and get nothing for or tie up precious space.....not leasing, streaming, renting or none of it.

  • Report this Comment On April 27, 2014, at 8:41 AM, joujou77 wrote:

    If hardware is not necessary than why do they upgrade their hardware every time they release a new console? Eventually hardware that access these games will need an upgrade. Unless they have planned to stop upgrading. Which means all the Nintendo haters out there will be loving Nintendo again as they will probably have the most powerful gaming system again just for the simple fact they actually made a new one. Video games are much much different than streaming video. All I have to say is hang in there Nintendo the video game industry will be there for the taking once again.

  • Report this Comment On April 27, 2014, at 8:49 AM, Tllypj195 wrote:

    Sam Mattera is by the worst writer on this website... It's hard to tell, is this serious or satire?

  • Report this Comment On April 27, 2014, at 9:13 AM, JJ82 wrote:

    Who allows this crap to be published?!?

    The Playstation is one of Sony's biggest money makers and the company has already sold off its computer division and is spinning off its TV division, its two biggest money drains.

    They will not walk away from games, or music as that is what the company is making money on.

  • Report this Comment On April 27, 2014, at 9:39 AM, GuitarJim wrote:

    I tend to agree with Yoshida's assessment. He's been with PlayStation since the beginning, and he can see the direction things are going. Almost all computer based services are moving back to the client/server model. It just makes a lot more sense to keep the massive horsepower centrally located where it can be expanded and upgraded as needed, and users can have a thin client with just enough power to deliver data between the user and the server. No special console is required when the UI will run in any web browser.

    The connection will be the bottleneck.

    Conventional video streaming models using a cache that's several seconds deep so that the client app won't starve for data during periods when the network pipeline is jammed. This is absolutely unacceptable with most games. The system absolutely must respond to user input within a single frame. There can be no latency. This is why most console games with online play capability send and receive only user interaction data, but video rendering is done locally on the client system. Local rendering requires some graphics horsepower, and the whole 3D world of maps and models to be resident in the client.

    Until we all have access to zero latency broadband then a hybrid system with a local data cache and rendering engine will be needed.

  • Report this Comment On April 27, 2014, at 10:37 AM, Theinsultedelf wrote:

    Cloud based gaming is a pipe dream for the foreseeable future. The world wide internet infrastructure simple isn't there to support it. Lag/latency is a killer in gaming. Especially multiplayer gaming. Anything over 100 ping is garbage.

    Some postage stamp sized countries may have 200-300meg service for everyone because of their population density per sq mile is so high it makes it cost effective but most countries do not and that includes the US.

    Cloud based services assume dependable high speed service with no cap's. In the US at least, the last 8 years as the internet has become more and more a part of doing business and entertainment at least has seen ISP's capping bandwidth on a regular basis. People that game, download a lot or steam TV, movies

    Cloud based gaming is a niche for those that don't have a console or PC powerful enough to play modern games. Another negative to cloud gaming is you only have a game as long as the servers are up . When Sony or M$ decides that not enough people are playing a particular game and shut down the servers for it you have lost your game for good. With my NES/PS2/360 I can still play them 30 years from now even if I'm the only one playing.

    Personally I think console are out because they simply can't make enough money to cover the cost of the units and infrastructure.

    Personally I'd like to see consoles on cards you plug into your PC. They would be cheap to make compared to a complete console and they could actually make money off the cards instead of losing money every time they sell a console. There is no telling how many games a player has to buy for Sony or M$ to break even on a console much less make money.

  • Report this Comment On April 27, 2014, at 10:48 AM, jasonveraSC wrote:

    Dear Motley Fool,

    Please take a journalism class.

    Signed

    Frustrated Reader

  • Report this Comment On April 27, 2014, at 11:42 AM, rajak223 wrote:

    I thank God I didn't drink the koolaid.

  • Report this Comment On April 27, 2014, at 12:00 PM, geedup6 wrote:

    God this guy is such a horrible writer. Please take a math class. 5 million to 7 million is not 40 percent less, it is a little less than 30 %. On top of that this is the same douche that's been screaming about Microsoft's downfall for the past year, and yet now Microsoft is being touted by Forbes as the hottest tech stock going today. Seriously read his other articles. This guy has the prediction capabilities of a slighter more blind, less intelligent Mr. Magoo. I have a rock solid prediction, if you follow this guy's advice you will lose every penny you have.

  • Report this Comment On April 27, 2014, at 1:05 PM, JohnnyS101 wrote:

    Did you guys even read the article? Sony is not walking away from making games, it may perhaps walk away from making the actual console. The PS3 was sold in 2006, making it last 7 years. Meaning the PS4 may last until at least 2021. By then, the 'cloud' should be efficient enough to run high storage and frame-rate games. A multi-player online game can run efficiently off just a few megabits of download data. By 2021, most Americans will have 5 times that speed as basic, easily. I can see this being the future, hardware is limited and software is limitless.

  • Report this Comment On April 27, 2014, at 1:46 PM, OldGamer89 wrote:

    Hmmm. I remember a few years back there was a similar game streaming service called OnLive. Lets hope Sony knows what their doing.

  • Report this Comment On April 27, 2014, at 1:54 PM, botie wrote:

    "By 2021, most Americans will have 5 times that speed as basic, easily. I can see this being the future, hardware is limited and software is limitless"

    So you are counting on, by 2021, the ISPs of America, whom of which has been some of the most loathesome you know whats in this country, to decide that they are in favor of internet expansion over profits and catch "most" americans up to speed on their internet? I've had the same single option of internet for 14 years at their so called 3.5 megs with "2.80 is an acceptable speed to our claims" via AT&T.

    Simple fact is, only cities and their surrounding areas will ever be worked on seriously by ISPs because that's where the most people are at. But don't kid yourself. They aren't going to expand into rural America. Largely rural america has one, maybe two ground BB options if you're really lucky, with the always no thankyou to satellites if you're a gamer. And that's about as much money as they are willing to spend on Sony's, MS's, and so on's dreams of a digital only world where the internet is used for all aspects of our lives.

    Here AT&T, after they just had to have Bellsouth's business, have predictably let bellsouth's high speed service go straight to hell with no interest in improving it with their oversubscribed DSL boxes, instead opting to focus on their cable service in the city. They are worth billions, and I've got a tech guy of theirs telling me he's waiting "for funds and the green light to upgrade your area's DSL bandwidth so it doesn't suck anymore"

    That was in Dec 2012. Hasn't happened yet. Just a FYI on your dreams that we'll somehow be ready to rock by 2021. Then again, eff rural america, right? Not enough to worry about? Well maybe if not for the fact that in America it's 30% of Americans living outside of your fantastic 50 MB and beyond internet connections. Most of that 30% only has 3-6 megs probably, which is more than enough for anything ever, but because DSL ISPs like AT&T refuse to spend fairly little money to keep these areas maintained, it's a living nightmare for the customer. For three years now I've lived with a consistent crap DSL, and I have never even gotten a tech to come out to the house. The one time I finally got ATT to agree to send me one, he called me and weasel'd his way out of the appointment by admitting to what we both knew, oversubscribed lines. But I still think there's a hardware issue on my end, namely the 40 year old phone box, that's causing problems. Wouldn't be the first time at this house.

    So sure, oh sure, we'll totally be ready by 2021 for this digital revolution.

  • Report this Comment On April 27, 2014, at 2:04 PM, speculawyer wrote:

    Oh sure . . . and that is why OnLive became such a huge success.

    Oh wait .. . they flopped and pretty much went bankrupt.

  • Report this Comment On April 27, 2014, at 2:37 PM, CDreams wrote:

    https://www.youtube.com/watch?v=nUBVvk-JUwQ

    Remember the Playstation 9 Commercial, PS9, Playstation 9

  • Report this Comment On April 27, 2014, at 3:59 PM, smoothi1981ivan wrote:

    Playstation Now is nothing all that big.. Its streaming and it even downgrades the resolution. Just because there's some new technology don't mean the worldwide media is going to go away.

    Everybody thought because of the whole android OS and things like the Ouya that the PS4 and Xbox One wouldn't really sell. Talking about why spend $400 on a PS4 when you can spend less for a Ouya. But then again that's not how the world works. People spent $1500 on a basic Apple MacBook. when they can spend half of that for same specs in a Windows PC. People were spending $100 for an iPod Nano (basic music player) instead of $20 for a basic mp3 player. Price wasn't gonna keep people away.

    Too much money and profit in console games for that to be it. Things are just gonna keep evolving. And if they did go with that whole Playstation Now crap I wouldn't be on board.

  • Report this Comment On April 27, 2014, at 4:47 PM, awang0718 wrote:

    As long as Sony is alive, Playstation 4 will not be Sony's last sonsole. Playstation Now is a commodity built to play old Playstation titles, not new, upcoming games.

    If Mr. Mattera had written the article "The Playstation Vita Could be Sony's Last Handheld", I would probably agree with him. But there is no way Sony will stop making home consoles unless Sony goes bankrupt. If Sony does go bankrupt, it won't happen in the near future, so gamers will still get to enjoy PS4 and PS5.

  • Report this Comment On April 27, 2014, at 6:14 PM, kdognumba1 wrote:

    Not happening. You see how negative gamers were with DRM, this "service" will restrict them a lot further then DRM will. I'm sure Sony looked at what happened with Xbox One and will make sure not to make those same mistakes.

  • Report this Comment On April 27, 2014, at 7:48 PM, ShadowOfTheVoid wrote:

    People (and by "people" I mean the digital-only evangelists) who think that console gaming can and should go the way of Steam are foolish and misguided. You see, console gaming is a different beast entirely from PC gaming. Steam may have worked for PC gaming, but that’s because of the nature of PC gaming and PC gamers themselves. It works for PC gaming because A) PC gamers are more tech-savvy and are obviously all online, and B) PC is an open platform that allows many different competing digital storefronts. One can buy digital downloads of PC games from Steam, Amazon, GOG.com, Origin, and so on.

    Likewise, the nature of console gaming and console gamers precludes a digital-only future for quite some time, perhaps several decades or more, and growth in digital purchases of games that are also available at retail will likely be very slow if not flat. They just want to throw the disc in the tray and start playing and would rather not have to set up an internet connection and wait two hours for a game to download.

    The biggest obstacle facing an online-only/digital-only console is simple infrastructure, or lack thereof. Something like a third of U.S. households lack broadband access altogether, and those who do have broadband don’t exactly have ideal connections and may have to deal with arbitrarily low bandwidth caps. Incidentally, roughly a third of Xbox 360 owners are not online in any form. Another technical obstacle is hard drive space, which console makers don’t exactly provide a lot of. 500 GB can go really fast these days, and having to continually re-download games you removed to make room for something else but want to play again could get tiresome really fast. In addition, consoles are closed platforms. You want to download games on your new eighth-gen console? Well, you have to buy directly from the console manufacturer. There are no competing storefronts to do things like drive prices down.

    Finally, the demand is just not there. While the option to buy digital has been available for a few years now, console gamers still vastly prefer physical discs. Downloads are still a tiny portion of all console game sales (indies and other small digital-only games excluded). Remember the digital-only PSP Go? How did that work out for Sony? Not too good. It sold poorly. Remember the original online-only plan for the Xbox One? How did that work out for MS? Not too good. They got savaged by gamers. And remember OnLive? Of course you don't. It's already a historical footnote.

    Digital-only consoles are a long way away, and it could be decades before they're even feasible.

  • Report this Comment On April 27, 2014, at 7:50 PM, Allend406 wrote:

    I don't like it they go exclusively with cloud gaming than I will unfortunately buy an Xbox.

  • Report this Comment On April 27, 2014, at 10:49 PM, rav55 wrote:

    The point of using AMD silicon was to have a sole source supplier to provide for product refreshes to extend the life of the console. Why design a new PS5 when a PS4.1 with updated silico and hardware is all that is needed.

    Right I'd like to see 4k gaming over the internet. And what about all of the users who don't use the internet with PS4?

    I would never put my data on the cloud nor would I depend on the internet for my gaming. The FCC just repealed net-neutrality. Not to far away is the day they will allow providers to throttle the service. Ending your game.

  • Report this Comment On April 28, 2014, at 12:42 AM, DisplayName wrote:

    I strongly doubt it, even the best internet has latency issues when playing twitch type games (fps) through cloud services, I doubt this changes. The US (those who whine US isn't the world, it is a large portion of their console sales) structure is so behind most gamers won't even be able to play non fps games enjoyably.

    Which doesn't even mention the fact that nearly every ISP is testing data caps. I do think eventually it will go to the cloud, but I doubt it'll be in 6 years when the new consoles come out, they'll make the original xbone console everyone whined about with 24 hour checkins as it will be a 100% digital content system.

  • Report this Comment On April 28, 2014, at 1:36 AM, clqtte wrote:

    If Playstation Now was very successful and profit to Sony for long term when it came out, Sony might not make a PS5, but if it failed very bad....Sony would know what to do next....

  • Report this Comment On April 30, 2014, at 10:59 AM, anash91 wrote:

    I would not stream games. Any amount of latency, whether it be 1ms or 100 ms is going to cause problems. I can't imaging playing a game as if I were online all the time. That would cause problems as game consoles already have a a few ms of lag, and if you couple that with the internet, platformers would be harder, but not for a good reason.

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