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Ganoncrotch said:

Even at the most basic level you have to understand that no one plays their PS4 around the clock, most would play in the evening which handily enough rotates around the globe daily! so only one time zone is a peak user of hardware for a SAAS cloud service like this. Proper server management would not mean having the power of the number of users of the service all at once, that would be insane.

Of course, but its not that simple. 

Say you start a streaming service. And you have hardware that can virtualized 1M consoles. Of course at the beginning you don't expect your all 1M slots to be taken up simultaneously at all times. So you can issue out 2M subscribers which are covered by your 1M slots. 

When you subscriber base goes up to 5M, you need to increase those slots to at least around 2.5M and hope you don't release any one game that everyone in that one territory wants to play at once. 

And that's all just one territory. 

Then consider that such a subscription service will have a much much much lower price of entry. Probably something along the lines of $30/month at its highest.That unfortunately means your adoption rate is going to be a lot higher. Especially around those months when games like uncharted are coming out. 

Bottom line, you can't just lowball it and there are tons of variables to consider. You also can't afford to have people pay to play games and end up with a sub par expericne. Whatever the case, if you at any point have a user base of 100M people, you can't make do with only 20M slots. And with something that requires a very low price of entry, you will get to that 100M really quickly. 

This isn't like Netflix, the hardware required to drive games is waaaay more complex and expensive than whats required to drive video streams exclusively. This is like having Netflix and something else entirely that's way more expensive than Netflix ever was combined.