Sony's PlayStation TV Could Kill Amazon's Fire TV

The battle for the living room is heating up. While game consoles like Sony's (NYSE: SNE  ) PlayStation 4 have a lock on hardcore gamers, the casual gamer is still up for grabs. (NASDAQ: AMZN  ) recently released the Fire TV, a $99 device with a focus on both streaming video and playing Android games on the TV. While the prospect of playing games designed for phones and tablets on a TV may appeal to some, previous attempts at Android gaming in the living room, like the Ouya micro-console, have completely failed.

Sony, not content with its lead over rival game consoles, is now trying to capture the more casual gaming market as well. Sony recently announced the PlayStation TV, a $99 device which will launch this fall in North America. The PlayStation TV will support video streaming services, as well as the ability to stream games from a PS4 to a second TV in the home. The real kicker, though, is that the PlayStation TV will support streaming PS3 games over the Internet using Sony's PlayStation Now cloud gaming service. With this device, Sony will lower the cost of entry into the PlayStation ecosystem, and if the Playstation Now service works as planned, it may mean another serious setback for Android gaming in the living room.

Playstation TV. Source: Sony

It's all about the games
While the Fire TV had over 100 games at launch, with thousands more coming soon, many of these games are normal Android titles that have been ported over. There are some quality games, like Minecraft: Pocket Edition and Grand Theft Auto: San Andreas, but both of these have been available on any Android device for quite some time. Amazon is making its own games through Amazon Game Studios, but so far, it's only released one game, Sev Zero, a game that "looks like it could have been released for the original Xbox," according to video game website ShackNews. This raises questions about the long-term viability of the platform if Amazon's own game can only match the visual quality of console games from 2001.

When the PlayStation TV launches, it will open up the PlayStation ecosystem to those who have never shelled out hundreds of dollars for a game console. A new PlayStation 3 still costs around $270 bundled with a game, so a price tag of $99 is quite attractive. While the PlayStation TV will be able to download and play PlayStation Vita games, as well as classic PSone games, the success of the PlayStation TV is tied to the success of PlayStation Now, and with cloud gaming still unproven, there's plenty that could go wrong.

Streaming games over the Internet introduces lag between when the player presses a button and when the effect is actually seen on screen. This depends on the speed and quality of the player's Internet connection, and games that require lightning-fast reflexes may prove to be unplayable for some.

Another issue is the potential for outages. After outrage from gamers, Microsoft was forced to backpedal on plans to make its Xbox One console require an Internet connection at all times, and with the PlayStation TV essentially useless without an Internet connection, or if the PlayStation Now service is down, that may deter some from jumping on board the cloud-gaming bandwagon.

Game prices are another concern. Sony plans to offer games on a rental basis initially, although there are plans to eventually offer a subscription. Rentals will cost between $2.99-$19.99 for different rental periods, with each developer having control over prices for their games. The prospect of being able to rent a PS3 game for a few dollars sounds alluring, but Sony risks pricing these rentals too high. $19.99 for a rental, even a long one, seems expensive, although Sony is still testing price points during the service's beta period.

The bottom line
If PlayStation Now performs as planned, and game rental prices are reasonable, the PlayStation TV could be a massive success. Imagine playing a game like The Last of Us, called a masterpiece by IGN, on a $99 device. Contrast that with playing games designed for smartphones that look like they belong on the original Xbox using a Fire TV, and the potential of Sony's cloud gaming service becomes clear. It all comes down to execution on Sony's part, but the company has the opportunity to vastly strengthen its grip on the living room.

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