The Console War That Never Happened

And the living room that could have been. How Sony and Microsoft missed an enormous opportunity.

Today, in Tokyo, Sony announced the PS Vita TV. It’s a tiny, elegant little device that can stream video and media from third-party services, access a vast library of PlayStation Network titles, and even play selected Playstation Vita titles on the television.

And if it had come out four years ago, it could have been a contender.

Think back, if you will, to the fall of 2009. The third version of Apple TV had just launched, and two things were becoming increasingly clear: 1) The $100 set-top streaming box was going to be a major product category, and 2) There were really no good options.

Remember, in 2009 Apple TV was basically a broken product, a way to stream walled-garden iTunes content to a television and little else. It was fortunate, however, to have no truly credible competitors. There were pure hardware makers, router companies like WG, Seagate, and Netgear, which made devices with no exclusive content and limited or no access to any outside media services. Even when Sony entered the market with its own streaming box, it was an inferior product with nothing to differentiate it from Apple TV, Roku, or Google TV.

We know what happened: Apple TV, and the competition, got better, and Sony and Microsoft stood pat. But what if the two giants of console gaming had inserted themselves into this weak — and highly lucrative — young market?

Imagine the following: In fall 2009, Sony and Microsoft launch $100 PlayStation- and Xbox-branded set-top boxes. These devices, like the PS Vita TV, have no advanced console features — no disc drive, no AAA games — but they have all of the streaming media capabilities of the early streaming boxes, plus access to enormous and highly valuable gaming libraries through PlayStation Network and Xbox Live Arcade (which in 2009 were already mature). These are assets that to this day are only monetized against people willing to spend many hundreds of dollars for a hardcore gaming device. The 2009 versions of PlayStation TV and Xbox TV are, basically, media boxes with casual and retro gaming as a compelling side feature. On brand recognition alone, these devices would have risen to the top of that nascent market. Both companies could easily have added movie and music content, and both would have been ideally positioned to take advantage of the wave of interest in streaming media that attended the explosion in popularity of Netflix Instant.

The implications of such devices are pretty fascinating to ponder. If they became ubiquitous, it’s easy to imagine an explosion of $2–$20 indie games that would dwarf even what has started to happen on Steam and PSN today. Sony and Microsoft could both have benefitted enormously from the move towards digital distribution and content stratification in gaming, instead of belatedly (and at times painfully) moving toward a trend that was happening without them. Their app stores could have risen alongside Apple’s.

What’s ironic, of course, is that despite their cost and the fact that they were designed as mass market gaming computers, the Xbox 360 and the Playstation 3 are used as streaming devices by millions of people; in fact, they are already among the market leaders. To take one small example, more people used PS3 and Xbox 360 to stream the new season of Arrested Development on its first day than used Apple devices. It’s easy to imagine a different present in which the streaming box market is totally dominated by Microsoft and Sony.

None of that happened, of course. In 2013, Apple TV is an easy-to-use device with broad third-party support, and the increasingly likely prospect of Apple-supported game controller compatibility, which could in one stroke turn Apple TV into the best casual gaming device on the market. The past three years have seen the construction of a cheap game library on the App Store that even Sony and Microsoft, with years and years of back content, are hard-pressed to match in terms of price and diversity, and is ready to be adapted to a larger screen.

You’ll read a lot in the coming days about how the PS Vita gives new life to Sony’s struggling handheld, and how it represents Sony’s forward-looking content strategy. That’s nonsense. Sony and Microsoft were muscled out of the smartphone market just as it blew up, and it seems likely that they are going to miss out on the enormous potential of the living room, too, where they’ve been successful enough to breed complacency but have by no means dominated — nobody has, not yet. The PS Vita TV represents not the calculated entry of an electronics giant into a new space; it represents a massive, and irrevocable, missed opportunity.

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