MS know how to manage their servers and they make a lot of money renting them and developing software to optimize. Gaming is just a small percentage of the use, they won't lose anything on it.

Ok, my thoughts:

1.) Microsoft is the second biggest cloud provider; together with Amazon, Google and IBM they are the majority of the cloud computing market: https://www.srgresearch.com/articles/big-four-cloud-providers-are-leaving-rest-market-behind

Sony ain't even in the top 12 of cloud providers (Amazon, Microsoft, Google, IBM, Salesforce, Rackspace, Fujitsu, NTT, Deutsche Telekom, AT&T, HP, Alibaba): http://www.crn.com/slide-shows/cloud/300076702/pole-position-ranking-the-top-5-iaas-paas-and-private-cloud-providers.htm/pgno/0/6

So the Xbox-division will probably get much better deals on cloud computing than the PlayStation-division.

2.) Crackdown 3 uses the cloud features only in the online mode. PS Now games need a constant stream of the graphic data, no matter if the game is played online or offline. If the online mode gets less popular after a few months or years, the costs of the Crackdown 3 servers will fall.

3.) As long as the online mode of Crackdown 3 stays popular, the price of the game probably will stay above $20. XBL Gold is also needed for online, so that's additional revenue helping to pay for the servers. PS Now on the other hand doesn't need a PS+ subscription. Many of the PS Now games are older titles... most users won't be willing to pay $20 or more per game for "endless streaming" of these old titles.

4.) The use of cloud features of both services ain't really comparable. PS Now renders the game in normal quality and streams every pixel to the client, Crackdown computes physics data and post processing effects (which are much less data to transfer). So PS Now needs much less processing power but much more data traffic.

MS loses money all the time, and crackdown 3 is not a big investment for them. It's just about more content to support their platform.

This wont be a profitable game as Crackdown games don't normally break the sales barriers however I think its a loss they are accepting to lose. Crackdown is more about showcasing this technology then actually making a GOTY contender.

In my opinion they will lose money now but in the long run I see more devs interested in this technology and will probably start using MS servers which will allow for better income.

I think Crackdown is a case of a game that has a lot of potential but was never tapped.

Crackdown 1 & 2 had a lot of freedom and verticality in a sandbox game, when it was not a hot aspect yet.

Crackdown2 had 9 months of dev time and it never followed up on the success of its predecessor.

Crackdown done right could be a blockbuster for MS. All the ingredients are there, especially with the creator back, Dave Jones the creator of GTA series.

PS Now is different than the Cloud computing used in Crackdown. In PS Now if one pauses the game the PS3 virtual machine stays allocated to the user, while in Crackdown the Cloud gets used only when needed (like when an explosion needs to be computed).

So it's a matter of statistics. In PS Now a bit more than the theoretical power of a PS3 (let's say 350-400GFLOPS) is reserved 100% of times, even if idle. In Crackdown the servers run the simulations only when requested and thus for each user the Cloud gets used only in a small percentage of the user's gameplay time.

Still there is no doubt that even if it's owned by MS it has a significant cost. MS doesn't get the servers for free. Every server in Azure used by XBL is a server less available to commercial customers. The bandwidth instead could be negligible, sure much less than the one used by PS Now (again, for each user).

Oh, PlayStation Vue is yet again another thing. It's more like Netflix. Lot of bandwidth, little CPU time.

i hope this game flops it sets a bad precendent. Imagine if all the games come out now relying for servers for better graphics.

You know they really might be losing money.  But why would that stop them?  All XBOX has ever done is lose MS money.

Imagine if all the games come out now have multiplayer modes relying for servers for better graphics. You need an internet connection and multiplayer servers for the online part anyway... does it really matter to you if these multiplayer servers also do some additional calcuations to improve the graphics or remember the position of every player, NPC and object of a virtual town/world instead of remembering these things only for a limited area to save memory?

Ounce the box of pandora is opened there will be no coming back, it will start multiplayer first and then singleplayer. And it will make devolopers lazy to actually trying to get things running locally