MS wants to control the Cloud. If Amazon or Google win the race for a game streaming service, MS will be very upset.
Sony is small potatoes, Nintendo is basically a non-competitor/friendly colleague in MS' eyes.
If MS is successful in getting the defacto game streaming service, they "win" (at least by their metric).
That's right, I think Sony will probably be in a big trouble in the next gen, too.
Granted that all the big players (Google, Amazon, Microsoft) will offer a gaming service full of ALL the new games that will come, will Sony be able to compete with them?
Costumers want the best service at the lowest price (like Netflix is), a streaming service that is fast, reliable, cheap and with all the new releases available at day 1 (new games from ea, squarenix, capcom, bethesda etc), can Sony offer e better/cheaper cloud/streaming infrastructure than Google, for example? Can also Sony maintain all of their third-parties exclusives?
I doubt so :(
Maybe the VR can become a strong selling point for the Playstation brand, but it needs to evolve further.
Nintendo on the other side, is quite in a safe place in my opinion, because they have built a strong image, have their unique way of making games, strong characters and worlds, a very loyal fanbase that really wants new games from the series they produce from more than 35 years. If you want to play a Mario, Zelda or Pokemon game you need a Nintendo hardware. Also, partnership with Microsoft for a streaming service will make a Nintendo console more valuable, giving a costumer the ability to play virtually ANY game plus Nintendo original game.
I don't think Sony is in that much trouble. Playstation as a brand is incredibly strong. Their subscription service is actually above Game Pass in market share by a lot. Here's a chart from forevercloud3000's thread on the subject. It comes from an analysis by SuperData Research on Q3 2018 revenue.
Given this, I think Sony will be fine. Their VR is where they might struggle to compete in the future. There just isn't a lot of strong competition now, and Nintendo has stated that they're watching the space but not jumping in until the technology evolves a bit. I'd be interested into how Hololens plays into the evolution of the AR space, especially given Nintendo's incredible closeness to Microsoft lately. Nintendo's done a good bit with AR between the 3DS and Pokemon Go, so clearly they're interested in that space. I could see them developing unique AR experiences for Hololens that wouldn't be possible on normal consoles or phones. A new way to play games with multiple major players on board could really shake up the industry, possibly as much as Gamepass on Switch. As for VR, I think as the technology develops, it would be very easy for Nintendo to adapt a future Switch to be VR compatible, and at some point you know Microsoft is going to try their hand at it.
I think what really makes Nintendo so safe in the near future is not just their exclusives and brand loyalty, but the fact that it doesn't seem like either major console maker is going to compete with their hybrid console. Microsoft, if they do this, is basically making the Switch their door into the handheld market to sell software and services, reducing the incentive to make dedicated hardware for that purpose. Sony seems to be done with portables, has expressed that they don't feel like they're in competition with Switch, and could very easily offer Playstation Now on Switch as a counter to Microsoft's move, accomplishing the same thing Microsoft does and accessing the shrinking but still fairly healthy portable gaming market. With that much cooperation between the big three console makers, Apple, Google, and Amazon would all have a hard time entering the home console market, wouldn't be able to compete with the slew of high end experiences Gamepass and PS Now offer on Switch to compete in the hybrid market, pretty much have the portable market cornered already with their phones. So they would only really be able to compete with some kind of game streaming service, but perhaps even that has been headed off with Microsoft with some contractual language preventing Nintendo from allowing those services on their systems in exchange for Gamepass. That would isolate newcomer companies into their own ecosystems, preventing them from growing much.