Earlier this week, Sony (NYSE:SNE) announced PlayStation TV, a forthcoming $99 microconsole that doubles as a streaming set-top box. When it goes on sale later this year, it will compete directly with the Apple (NASDAQ:AAPL) TV and Amazon.com.com's (NASDAQ:AMZN) FireTV.
With its gaming capabilities and Sony's exclusive content, it could emerge as a strong competitive threat to Apple and Amazon.com's devices.
When it comes to gaming, there's no comparison
Amazon.com's FireTV is capable of playing video play games. With the purchase of a $40 controller, Amazon.com FireTV owners can play dozens of mobile titles and an exclusive game, SevZero, developed by Amazon.com's in-house studio.
But the video gaming capabilities of Amazon.com's FireTV won't come close to what Sony plans to offer with the PlayStation TV. Owners of Sony's set-top box will be able to access a catalog that includes hundreds of games, all of which were originally developed for dedicated gaming consoles (the PlayStation Portable, PlayStation Vita and original PlayStation) and some of which are regarded as being among the best video games ever created.
Eventually, the PlayStation TV will gain access to PlayStation Now, Sony's upcoming, on-demand cloud gaming service, allowing its owners to play graphically intensive games originally developed for the PlayStation 3.
In other words, if gaming is a feature that matters to would-be set-top buyers, there is little reason why they would choose Amazon.com's device over Sony's PlayStation TV, as the relative price of the boxes and their respective controllers are exactly the same.
Apple's interest in gaming
Unlike Amazon.com's FireTV, Apple TV can't play any video games, meaning that the 20 or so million customers that have bought one likely don't care too much for gaming.
But it appears that Apple does. Metal, the new graphics API Apple unveiled last week, allows its mobile processors to output graphics on par with the latest video game consoles. The acquisition of PrimeSense (the company that helped developed the original Xbox Kinect controller) and reports of a forthcoming app-enabled Apple TV lend further credence to the notion that Apple is interested in the video game space.
If the Apple TV never becomes a microconsole, Sony's PlayStation TV would have a major competitive advantage over Apple's device. Customers, choosing between the Apple TV and Amazon.com's FireTV, might not be swayed by the handful of mediocre games available on Amazon.com's platform -- they may, however, give serious consideration to the deep catalog Sony is offering.
Sony is creating its own shows
Sony hasn't yet unveiled which streaming apps will be available for the PlayStation TV. However, if Sony's other consoles are any indication, all of the usual suspects will be available, including HBO Go, Hulu and even Amazon.com Prime Video.
But Sony could have an edge when it comes to exclusive content: The Japanese giant has announced that Powers, a forthcoming, live-action original series will debut on PlayStation devices in December. A PlayStation+ subscription will be required to watch the series, but if it's a hit, it will be a show that Apple and Amazon.com's devices can't offer.
Filing in the gaps
Sony's video game consoles are already dominant in the streaming space -- in fact, in December 2012, Sony announced that the PlayStation 3 was (at least at that time) the single most popular device for watching Netflix.
Unfortunately, they're expensive: The PlayStation 3 retails for about $250, and the PlayStation 4 goes for $399. That's allowed Apple and Amazon.com to successfully sell cheap streaming set-top boxes to customers that may not be interested in shelling out hundreds of dollars on a console.
With the PlayStation TV, Sony is offering a product that could appeal to those customers, and with Sony's extensive gaming assets, win them over.