Market Insight

Sony and Samsung partner on PlayStation Now

December 30, 2014


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Sony’s PlayStation Now service is being brought to a range of 2015-year Samsung Smart TV sets. The PlayStation Now gaming platform – which remains in beta in the US and Canada – presently allows PS4, PS3, PS Vita, PS TV, and Bravia TV owners to stream a selection of PS3 titles to their Sony devices. Rental prices – which remain in-flux – currently range from USD 1.99 to USD 19.99, and vary as a function of a rental length. While Samsung has yet to announce the 2015 models that will support PlayStation Now, Samsung Smart TV owners will likely need to purchase a separate Sony DualShock controller in order access and play Now titles.Sony’s PlayStation Now service is being brought to a range of 2015-year Samsung Smart TV sets. The PlayStation Now gaming platform – which remains in beta in the US and Canada – presently allows PS4, PS3, PS Vita, PS TV, and Bravia TV owners to stream a selection of PS3 titles to their Sony devices. Rental prices – which remain in-flux – currently range from USD 1.99 to USD 19.99, and vary as a function of a rental length. While Samsung has yet to announce the 2015 models that will support PlayStation Now, Samsung Smart TV owners will likely need to purchase a separate Sony DualShock controller in order access and play Now titles.

Our Analysis:

PlayStation Now’s hop from the Sony device ecosystem into the universe of 3rd party hardware represents a natural, sensible extension. It also leverages the existing relationship Sony’s Gaikai established with Samsung to implement cloud gaming back in 2012. As PlayStation Now’s availability continues to broaden and its business model begins to settle, cross-platform availability will allow Sony to monetize more effectively back-catalogue titles, and over the longer term, broaden the footprint of a service that can and likely will be used to drive digital purchases or subscription streaming.

For Samsung in particular, the ostensibly new partnership has precedent. Samsung has experimented with Smart TV-based cloud gaming since 2012, and first brought game streaming to its 7000 and 8000-series LED TV sets. More significantly, the Samsung-Sony relationship builds upon prior partnership. Although Samsung has ceased to bundle the service into its 2013 and 2014-model Smart TVs, the Korean manufacturer relied upon Sony-owned Gaikai to shoehorn AAA game streaming onto its 2012-model LED sets.

Strategically, Samsung’s persistent-if-evolving interest in cloud gaming comes as little surprise. The calculus here is twofold. On the one hand, in a hypercompetitive Smart TV space, manufacturers of all stripes are experimenting with a diverse range of features to differentiate their sets. Cloud gaming fits comfortably within the industry’s see-what-sticks development philosophy, which has brought algorithmic content recommendations, voice-and-gesture controls, in-home media sharing, screen mirroring, and cross-source OTT content search to many Smart TVs.

Second, in a Smart TV space characterized by razor-thin profit margins, manufacturers are relying on apps to generate incremental revenue. To date, TV makers have attempted to stipulate revenue-share agreements – however modest – that produce income when users transact via, and funnel payment through, the TV app platform. Although neither Samsung nor Sony has revealed any details pertaining to revenue share, it is likely that PlayStation Now rentals effectuated on Samsung sets will generate a small cut for the Korean manufacturer. In this sense, PlayStation Now may simply be another arrow in Samsung’s quiver of online services subjected to revenue-share.

What is less clear is whether the partnership has competitive and strategic value beyond the Smart TV space. Given that DMAs such as Amazon’s Fire TV and Google’s Nexus Player have made explicit overtures to gamers, and to Android gaming in particular, Samsung will look to forestall any future where DMA-based play pulls users and consumption away from its Smart TV platform. Premium, Smart-TV based gameplay may well be the insurance policy that Samsung is looking for.

In the present however, the risk posed by DMA-based Android gaming is still limited; AAA gaming and lower-end Android gaming remain largely separate markets. Now that Sony has taken its first step in the direction of cross-platform support, a potentially greater risk is posed by PlayStation Now’s springing from the Smart TV space into the Roku, Fire TV, and Google Android TV world. Given that extending PlayStation Now to these devices would constitute a sound strategy both for Sony and its DMA partners, Samsung may simply be looking for first-mover advantage. In this view, Samsung is trying to exploit what it perceives to be a limited time-window around the opportunity for premium, Smart TV-based gaming.

 

Geography
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