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Did CES Just Kill the Old Video Game Console?

Stocks in this article: MSFTSNEATVITTWO

PORTLAND, Ore. (TheStreet) -- The gaming console as we know it just went on deathwatch.

During the 2013 Consumer Electronics Expo, we predicted that physical games would be in serious trouble thanks largely to devices such as the NVIDIA Shield, which gave users a way to play full-bodied console games from cloud-based services such as Valve's Steam without using a PC or a big console that had to read discs. By the time the Electronic Entertainment Expo rolled around last summer, Microsoft and Sony placed streaming and downloaded games at the center of their Xbox One and Playstation 4 consoles while giving disc-based games enough lip service to briefly postpone their demise.

On Monday, Valve just kind of giggled at that response. After consumers around the world spent this holiday season buying up more than 4 million PS4 consoles at $399 a pop, 3 million Xbox One systems for $499 and enough Nintendo Wii U decks at $250 to $330 apiece to bring total sales to more than 5 million, Valve just announced partnerships with third-party developers that could either send console prices plummeting or, just as frightening, eliminate the need for new consoles altogether.

Sony responded by introducing its Playstation Now streaming service through recently acquired streaming company Gaikai. Gamers will still need a PS4 to play that console's games, but Kotaku says they can now stream games for the Playstation 1, 2 or 3 onto Bravia televisions, Playstation Vita handhelds and on tablets and smartphones. It just made casual gamers aware of something PC gamers from Steam users to Nintendo Entertainment System ROM players have known for quite some time: The console isn't a necessity. 

Valve's all too aware of that. After spending a year doing a trial run of its so-called Steam Machines program with 300 beta testers on first-party consoles, Valve let it slip to Engadget just before CES 2014 that a whopping 14 companies would be producing machines designed primarily to play games through its Steam streaming service. Those names include iBuyPower, Digital Storm, Alienware, Falcon Northwest, iBuyPower, CyberPowerPC, Origin PC, Gigabyte, Materiel.net, Webhallen, Alternate, Next, Zotac and Scan Computers.

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