Sony's offering is the latest product to be thrown into the highly competitive space dominated by Netflix. Video streaming services are posing a serious challenge to traditional TV entities. In the U.S., Netflix has 37.5 million subscribers compared to 22.4 million for Comcast and 20.4 million for DirectTV, according to IHS.
Netflix is also well ahead of Internet TV platform Hulu which has just 7.1 million subscribers. But analysts said that PlayStation Vue is a direct challenge to cable networks rather than Internet-only platforms, with the live TV offering being a big advantage in the online video market.
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"The big question at the moment is will people drop their incredibly expensive cable subscriptions in favor of just living an on-demand life," Michael Underhill, senior research analyst at Enders Analysis told CNBC by phone.
"But if you can bundle live events like sports and shows in to a price that doesn't tie you in in the long term, and it's delivered over the Internet, then that is quite unique."
Users will be able to view the service through their PlayStation consoles and eventually on Apple's iPad, a move that analysts said would be a big boost for Sony, considering the more than 90 million people who own a PlayStation 3 and 4.
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"Today's announcement builds on the historic success of PlayStation 4 and demonstrates what our company is capable of when we embrace disruption and stay true to gamers," Andrew House, president and group CEO of Sony Computer Entertainment, said in a press release.