On March 18^th, Sony Network Entertainment and Sony Computer Entertainment announced the launch of PlayStation Vue, an over-the-top (OTT) subscription TV service on the PlayStation 4 (PS4) and PlayStation 3 (PS3). Initially available in New York, Chicago and Philadelphia, PlayStation Vue will offer subscribers live and on-demand TV programming starting at $49.99 per month. Included in this offer is a cloud-based DVR feature that allows subscribers to watch any episode of a show that aired with in the past 28 days.

PlayStation Vue is comprised of three tiers of service.

Access

The Access package costs $49.99 per month and includes broadcast networks like CBS, FOX, and NBC as well as more than 45 of the most popular channels.

Core

The Core package costs $59.99 per month and includes all the channels in the Access package, plus local regional sports networks, as well as additional sports and movie networks.

Elite

The Elite package costs $69.99 per month and includes all the channels in the Access and Core packages as well as more than 25 lifestyle, music and family channels.

On the surface this does not sound much different than existing offers from other pay TV providers. In fact, Sony is providing fewer channels for the same price than Comcast, Verizon and other pay TV providers; however, unlike these other pay TV providers what you see is what you get.  There are no hidden set-top box or technology fees and the rate will not automatically increase in a year or two after the introductory offer expires. In addition, PlayStation Vue includes the cloud-based DVR in the basic subscription fee. All told PlayStation Vue cost approximately $30 - $40 less than a comparable pay TV subscription. Furthermore, since you need a PS3 or PS4 to use PlayStation Vue (and it is probably safe to assume that PlayStation Vue will be available on other devices in the near future) it removes the capital expense of acquiring and maintaining STBs that other pay TV providers face.

Now that is not to say PlayStation Vue is not without warts. In particular, it is missing several key channels/networks including ABC and ESPN and is only available in three markets currently. Also, on the surface PlayStation Vue does not seem to provide consumers weary of the high cost of pay TV a break. It is only when you did down into the fine print that the difference in cost become evident.  Communicating this to consumers is going to be a challenge, particularly that is seems like Sony is asking consumers to pay the same amount for fewer channels.

At the moment PlayStation Vue has a distinct advantage, operating without many of the same burdens as their facility based competition (i.e., retransmission/must carry and other program carriage rules). While the FCC has signaled that they intend to even the playing field by defining Online Video Providers (OVDs) that deliver a linear stream of programing as Multi-Channel Video Providers (MVPDs). Doing so, however, is not without challenges. As noted by the National Cable & Telecommunications Association doing so has the potential to give rights to online entities the FCC does not track or license and may not have physical facilities in the U.S.

Whether or not the FCC chooses to apply these rules to PlayStation Vue and other similar OTT video services remains to be scene. But despite this PlayStation Vue represents an interesting view on what the future of subscription TV could look like.