Sony (NYSE:SNE) has been making major headway in the so-called console war, with its PlayStation 4 console setting sales records right from its day of release. According to official sales figures, the console sold approximately 1.2 million more units as of the end of 2013 than Microsoft's (NASDAQ:MSFT) Xbox One did; this will give the company a solid advantage going into 2014.
Of course, there are still several years to go in the new console generation and an early lead can dwindle over time. To help maintain its lead, Sony is providing more benefits to PS4 owners. And these benefits should help the company prop up some of its other platforms that haven't been breaking sales records as well.
Enter PlayStation Now
At the recent Consumer Electronics Show, Sony unveiled a bit more information about its upcoming PlayStation Now streaming service. The service will stream playable games over the Internet to compatible devices such as the PS4, allowing players to enjoy them without physical media or a potentially hours-long download. Most of the processing required to run the games will occur in Sony's servers, reducing the amount of data that must be streamed to cut down on bandwidth requirements.
While some might draw parallels to existing streaming services such as Netflix (NASDAQ: NFLX) or Amazon.com's (NASDAQ: AMZN) instant viewing options, in some ways PlayStation Now is actually a bit closer to Nintendo's (NASDAQOTH:NTDOY) Virtual Console on the Wii and Wii U. The service will let gamers enjoy games from older PlayStation consoles, though they will have to pay to do so (either a flat-rate subscription or per-game rental fees).
The content war
While the PlayStation 4 has a lead on the Xbox One, the final victor in the latest console war will be determined by which console provides the best content for players. In addition to exclusive games such as the latest entry in the "Halo" series and Electronic Arts' (NASDAQ: EA) Titanfall, the Xbox One is set to feature original video programming to try and provide a more well-rounded entertainment experience. This is similar to how Netflix has been branching out into original programming such as its Emmy-winning House of Cards and its upcoming set of Marvel Studios projects.
Sony, on the other hand, is focusing on making the PlayStation 4 into a gaming console first and foremost. In addition to allowing gamers to enjoy older PS games through PlayStation Now, it is also providing portability options through interactivity between the PlayStation 4 and the PS Vita handheld; players can transfer games to the handheld to continue playing on the go.
Of the two approaches to providing more content to consumers, Sony's seems like a safer bet. While a hit original series or two might help to sell Xbox One consoles, trying to make it big with original content can be very hit or miss. Netflix has been successful with it, but Netflix also has access to the viewing habits and preferred genres of its userbase... that gives the company a very distinct edge when it comes to figuring out which genres it should expand into.
The drawbacks of Now
Of course, even the PlayStation Now model isn't without its flaws. Some worry that Internet streaming could introduce lag into the game controls or that games might freeze up or buffer during gameplay. Gamers have also been discouraged to learn that the system won't be able to recognize games that they already own on older consoles so they'll have to rent or buy them again to play them.
One other potential drawback comes from the rollout of new games. This was the largest problem that Nintendo faced with its Virtual Console on the Wii, since only a few new titles were released each week. The problem seemed to get worse on the Wii U as a number of the Virtual Console releases were simply repeats of NES and SNES games that had already debuted on the Wii ... and that players still had to pay a premium to get the Wii U-updated versions of, even if they owned the Wii version. Given that the PlayStation Now service will contain games from all of the previous PlayStation consoles, a slow staggered release could dampen early enthusiasm for the service.
Gaming in the digital age
While some have declared that PlayStation Now might potentially be a GameStop (NYSE:GME) killer, the service needs to be a success first. GameStop enjoyed a robust holiday season on the backs of the PlayStation and the Xbox One, and will likely continue enjoying both new and used game sales for a while until a solid digital alternative really takes off.
With the PlayStation Now service expected to roll out this summer, owners of the PlayStation 4, the PS Vita, Sony Internet-ready TVs, and other compatible devices potentially have a lot to look forward to. At the moment it's hard to separate the hype from the reality, though, so it's important to keep in mind that Now might not change the future as much as some might lead you to believe.
John Casteele owns shares of Microsoft. The Motley Fool recommends Netflix. The Motley Fool owns shares of Microsoft and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.