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Sony Is Shaking Up Its Streaming Gaming Offerings

By Stephen Lovely - Oct 17, 2019 at 8:25AM

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Price points are a big deal in this space, and Sony's is changing its subscription model for PlayStation Now to better compete.

Sony (SONY -0.32%) hasn't always been at the forefront of streaming gaming. The company has a streaming game subscription service called PlayStation Now, but that service has long been decried for its relatively high price point and lack of marquee games. But recently, as competitors like Alphabet's (GOOG 0.45%) (GOOGL 0.52%) new Stadia cloud gaming platform emerge, Sony has begun shaking things up.

Moving to address the weaknesses of its streaming video game service, Sony is adding some big titles to PlayStation Now. And, perhaps more importantly, it is slashing the subscription price. It's an important decision for Sony, especially as cloud gaming threatens to upend the console market in which Sony has been so successful for so long.

A man plays video games

Image source: Getty Images.

Sony's big move

PlayStation Now isn't new. The service has been around since 2014, an eternity in streaming video game terms. Five years ago, Sony's PlayStation 4 was barely a year old and competitor Microsoft (MSFT -0.40%) was years away from announcing Xbox Game Pass, a PlayStation Now-like service that has since drawn favorable comparisons to Sony's less generous and more expensive streaming games service.

If PlayStation Now hasn't really taken off, it may be because Sony has not seemed all that eager to emphasize it. PlayStation 4 has been a major success for Sony in the games-as-a-product era. But the games-as-a-service era may be coming whether Sony wants it to or not.

That's why Sony has teamed up with rival Microsoft to expand its cloud gaming muscle. (Upon closer inspection, that partnership is not as strange as it sounds.) It seems Sony is directly addressing the failings of PlayStation Now.

The headline here is the price point. Until now, PlayStation Now has cost subscribers $20 per month. That's twice the price of Microsoft's Xbox Game Pass (console-only subscription). It's twice the price of Stadia's paid subscription, too. It's also roughly twice the price of the major music streaming services and north of what consumers pay for many streaming video services -- which, while not in the same exact business space, give consumers certain expectations about streaming-subscription pricing.

Sony has brought its prices down to the industry standard by cutting the old PlayStation Now price in half. Now, like its competitors, PlayStation Now will cost $9.99 monthly in the United States.

At the same time, Sony has added some big game titles to its service. God of War, Infamous Second Son, Uncharted 4: A Thief's End, and Grand Theft Auto V are the four major additions that Sony hopes will change the reputation of its service.

Timing is everything

It makes sense that Sony would make this move now. Previously, Sony didn't have much reason to care about its cloud gaming offerings. Its PlayStation 4 console was walloping Microsoft's Xbox One in sales, and games made by Sony's game-development companies were selling like hotcakes.

The arrival of Stadia and the looming threats of cloud gaming services from other tech companies, including Amazon, has changed things. Sony is moving on cloud gaming now, as is competitor Microsoft, which is adding an all-new cloud gaming service called xCloud, despite already having a streaming gaming service in Xbox Game Pass.

Sony's move is a reaction to Stadia, which is scheduled to go live on Nov. 19, so the company behind PlayStation has some time to respond. The PlayStation 4 is the king of this generation's video-game consoles, meaning that Sony has a built-in audience for its new and improved PlayStation Now service.

With a lower price, Sony might be able to convert its existing console customers into streaming-subscription customers. If successful, it could build a subscriber base before Stadia takes off -- and before a new round of console wars starts with the release of the PlayStation 5 and Microsoft's next Xbox device, code-named "Project Scarlett."

The road ahead

Now is a great time for Sony to be shaking up its cloud gaming offerings and making a greater effort to compete with Xbox Game Pass and (soon enough) Stadia and the rest of the incoming cloud gaming crowd. But Sony still has challenges ahead of it.

Competitors like Microsoft, Google, and (soon) Amazon have cloud server muscle in-house, while Sony has to work with its own rivals to get that same kind of server space. Sony will have a harder time in the games-as-a-service era than it did in this console generation. The company will need to leverage its video-game studios and keep making smart moves like this one in order to stay on top.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Stephen Lovely owns shares of Amazon. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Microsoft. The Motley Fool has the following options: long January 2021 $85 calls on Microsoft. The Motley Fool has a disclosure policy.

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