Sony (NYSE:SONY) is going to get a rare moment to shine tomorrow.
The struggling Japanese maker of consumer electronics is hosting an event to introduce its new PlayStation gaming console. The buzz is understandable. Sony could use some good news at a time when its flagship TV business has been profitless for years. It doesn't help that it's been losing market share with the PS3, especially stateside, where Microsoft's (NASDAQ:MSFT) Xbox 360 has been the country's top seller every month for the past two years.
Then again, hope springs eternal with every new console generation.
Sony can't afford to get greedy here. It's been burned lately by aiming too high in pricing its console and portable gaming devices. However, Sony also can't afford to let Microsoft continue to take the lead in turning its Xbox platform into the centerpiece of home theater entertainment.
Sony may have raised the bar by being the first console maker to allow the playback of Blu-ray discs, but streaming is the name of the game these days.
It all ends with the TV
Any gaming console worth its space by the television has to do a lot more than simply play games. The future of gaming is to replace the set-top box, and that's why Microsoft is investing in streaming content.
Sure, the PS3 will stream video and surf the Web, but that isn't enough. The Wii U does a lot online that the Xbox 360 and PS3 can do, yet it has been a disappointment for Nintendo (OTC:NTDOY) since its November launch.
Sony should know this. Unlike Microsoft and Nintendo, Sony actually has a filmed entertainment arm. However, even that might not be enough once Apple (NASDAQ:AAPL) makes its inevitable jump into this market.
Apple TV has been a reasonably popular set-top gadget, but the real prize here will be when Apple introduces its own smart television. It's going to happen. Steve Jobs himself discussed the possibilities shortly before his death.
However, if Apple's HDTV -- or iTV, as many have been calling it -- truly wants to raise the bar, isn't it going to have to perform double duty as a gaming console as well?
Think about it.
Nobody's talking about Apple entering the gaming market. Despite the runaway success of its App Store in selling casual games, no one is pegging the class act of Cupertino for hard-core gaming. Many of the wagers on where Apple will go next rest on wristwatches, phablets, and even cars. The holdup in getting a smart television out has centered largely on the licensing rights required to introduce a new television service.
The iTV will have to do more than that, though anything that finally breaks through in giving consumers piecemeal pricing on the video content that they're actually watching is applause-worthy. The rub is that Apple is going to have to deal with Sony, Microsoft, and to a lesser extent Nintendo giving die-hard gamers rich gaming experiences when they're not taking in TV shows or movies.
If Apple wants to own the living room -- and as reasonably well as Apple TV has sold, it is not as ubiquitous as the tech giant's other toys -- it's going to have to woo gamers and be a disruptor.
Microsoft has 46 million Xbox Live subscribers, and the average user is spending 87 hours a month interacting with their TVs. Apple is going to want a piece of that, and it's going to have to be willing to play games to get there.
Making up for lost time
How does Apple catch up to the three gaming icons? Apple's army of third-party app developers will help, and the App Store's level playing field -- a true meritocracy -- will inspire game makers to raise the stakes on richer gaming environments the moment that Apple makes its possible and financially feasible.
The leading software companies will come -- just as they have come to begrudgingly embrace the App Store -- the moment that Apple achieves the critical mass of players.
That will be easier than you think. The Wii U still has support even though Nintendo now only plans to sell 4 million systems in its fiscal year that ends next month. Just about anything that Apple will pull out will sell at least millions these days.
No one is going to talk about Apple tomorrow. It will be all about Sony, and how Microsoft will ready a response later this year. However, deep down inside, all three of the struggling console makers have to be worrying about what Apple will have up its sleeve when it finally breaks into the smart television market.
If Apple wants to play, it could be game over for at least one of the three gaming icons. There just isn't enough room in this niche for more than that.