Who will the Console (System) Wars and what will it look like? - Answer Everybody & Awesome

The recent partnership between Sony and Microsoft has brought dramatic questions about the circumstances under which it was formed. Most fans are taking to generate their own narratives, while Bloomberg gives us an intriguing look at what was already occurring behind the scenes.

https://www.gamespot.com/articles/playstation-was-largely-left-out-of-negotiations-w/1100-6467019/

Negotiations between Microsoft and Sony began in 2018, a spokesperson for Sony said. However, the company has not publicly commented on the claim that the PlayStation team was largely left out of the negotiations.

Bloomberg's story also claims that Sony and Amazon held discussions in 2018 to talk about the potential for a "deeper collaboration on cloud gaming." However, the two sides could not come to terms over the business side, according to a source. After this, Sony apparently started talking to Microsoft. Amazon's Amazon Web Services cloud computing platform powers the PlayStation Network, so Sony and Amazon were already working together. (For what it's worth, Amazon is also reportedly planning its own future game-streaming platform)

The significance of this statement is two fold. Sony has always required a partner to develop its cloud infrastructure and currently partners with Amazon. In attempts to collaborate with Amazon on further cloud development negotiations failed leading to an opportunity for MS and Sony to investigate partnerships. Whatever the terms of the negotiations are they are clearly better than Amazon's. This lends credence to the idea of Sony & MS subsidizing the cost of development but sharing cloud infrastructure rather than a discreet client/customer relationship.

Nintendo, also working with MS implies a very specific future for all three companies where each focuses on their specializations.

Sony, MS, and Nintendo all still continue to operate as game publishers.

Nintendo moves focus back to handheld devices. Leveraging MS cloud technology to close the gap graphically on Sony & MS rather than compete on hardware. This gives room to focus on other realms of innovation rather than power.

Sony continues to offer both a cloud service and traditional console for those who prefer the best image quality and reduced latency. As cloud infrastructure improves this becomes more niche, but still exists as a cloud platform.

Microsoft continues to publish games, however eventually reduces much of its footprint in gaming while providing the backbone and services for various gaming platforms. This is the most reasonable end if Microsoft and cloud gaming is successful for the reasons Bloomberg lists below.

Most analysts agree that, at least in the short-to-medium term, it’s a positive for Sony. Cloud gaming isn’t ready for prime time yet. When Google unveiled Stadia in March, some users reported mixed results including delays in registering actions and reduced graphics quality.

Microsoft may come out an even bigger winner. The Xbox unit continues to churn out games and consoles, but is now increasing focus on ways to sell more cloud software. In March, it announced a lineup of services for game development and cloud hosting that it’s hawking to game companies of all sizes. Landing console king Sony makes it more likely that Azure, and not Amazon or Google, becomes the industry standard for cloud deployment.

Over the long-term, some are warning Sony could be the loser. Currently it charges publishers like Electronic Arts Inc. and Capcom Co. up to 30% of sales made through PlayStation consoles. But if streaming takes off, it will have to compete against Microsoft while paying its rival for cloud access. That could leave Sony struggling to stand out both on technical and pricing terms.

"This move raises some serious questions about its future dominance," said Anvarzadeh of Asymmetric Advisors.

It’s also unclear how antitrust regulators will respond to two of the three players in the console market teaming up to develop a key technology, especially as it involves the world’s largest company by market value. Cooperation by the No. 1 and No. 2 in any industry -- say AT&T Inc. and Verizon Communications Inc. -- to the determent of rivals would likely prompt push-back.

https://www.bloomberg.com/news/articles/2019-05-19/sony-s-deal-with-microsoft-blindsided-its-own-playstation-team

It's for these reasons that the most likely outcome of this partnership and the success of cloud gaming would be for MS to provide the infrastructure of the vast majority of cloud gaming while reducing its own presence in this business model to avoid anti-trust suits. This allows them to generate revenue from Sony, Nintendo, and any other service without needing to produce the platform themselves. The business end of these agreements make sense in the long-run and they could potentially be a scenario in a following generation where consumers purchase Nintendo handhelds to play Sony Playstation Now games streamed from Microsoft's Azure network. A scenario where they are no longer wasting resources competing and focusing on specific elements of the gaming experience they excel at.

System wars is over for a long time now.

Sometimes I struggle as to understand how and why people resort to some ridiculous logic stretching. I don't see how any logical person can conclude that MS is trying to reduce its footprint in gaming when they have expanded their gaming investments immensely over the past couple of years with Gamepass, Xcloud, acquisition of studios and the soon to be revealed next Xbox iteration. It would be better to just say "I don't want MS to being in the forefront of gaming." than to make of these illogical non linking correlation to come to a fake objective conclusion.

System wars is dead. Sony and MS are working together. Unless someone want to fight for Google and Epic for some odd reason.

Did you just gloss over the part where if MS succeeds in becoming the de facto cloud infrastructure for gaming they will likely get hit with hundreds of anti-trust lawsuits? Did you miss the part where Apple is fighting similar battles right now with the EU and in the US over just their apps store???

Did you miss the fact that I am addressing this claim? And how that claim makes no sense for the reasons I stated?

"Microsoft continues to publish games, however eventually reduces much of its footprint in gaming while providing the backbone and services for various gaming platforms."

Technically, an app store covers a lot more ground than just a gaming streaming service would. If everything from dating programs to games to productivity software to the app you use with your bank comes from one place, and only one place, that's a much bigger deal than having to buy all your games from one place. Not disagreeing about the possibility of an anti trust lawsuit, but the stakes are a lot lower with just games than with an app store.

If streaming ever became the only thing, then tech component stores are going out of business.

No, it would be similar due to the structure. At the base level Microsoft would own the infrastructure necessary to deliver the services for itself and competitors. Meaning Sony and Nintendo would be both competitors and clients in the same sector. Further MS has walled garden as in its own app store. Typically Sony/Nintendo take their royalties from that and use it to offset some of the cost of digital delivery. MS, could either lower their own costs or increase their competitors allowing them to further offer different pricing and undercut their own clients in the same competitive sector. The problem with Apple's store wasn't its existence, it was the fact that it was the only option on Apple products and they charge developers a 30% royalty similar to consoles. Its only a matter of time before consoles are hit with similar suits.

It makes perfect sense when their investments are predominantly services which run on other hardware. It would be different if they were developing a next gen connect or VR or anything else. MS's latest console release is a digital only Xbox, they box could be anything, a PS6/Next-gen Switch. It doesn't matter. MS was never interested in primarily making money of the hardware. They want to sell services because they are a service company. All the things you listed line-up exactly with MS moving to a services only model rather than a console based model. The partnerships with the two biggest hardware console manufacturers lends itself to that model.