Interesting. I wonder if later versions of this will also one day eventually evolve to replace Windows on PCs for PC-based gaming, judging by how Microsoft is getting everything wrong these days?
Still, we'll see how this goes. It's nice to see stuff like this appearing, in case the next-gen consoles fall short of people's expectations.
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The other will be a cloud service of some sort. Stream your Steam games over the internet to your Steam device, or something.
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Like with On-Live, internet infrastructure has a long way to go before services like that become a viable thing for most people. Valve and Sony (with their back-catalogue on PS4, if that's how they intend to do 'backwards compatibility') may get away with it though 'cause that's not the only thing their hardware will be able to do.