True, but the hardware still needs to scale linearly with the number of concurrent connections, and it leaves them pretty susceptible to high traffic related problems, like at peak times when games are first released. What if someone decides to launch a DDoS? Virtualization also limits the type of games they can run - you can't run a dozen PS3 games without a dozen PS3s.

On top of that, they shoulder the cost of upgrading the hardware, along with the risk - another Dreamcast (high initial sales followed by a severe dropoff) would be disastrous. I'm not sure how they can pass those costs on to their customers at a price point that's attractive to anyone who doesn't play lots of games per month (also making it possibly a net loss), or that's competitive with the more scalable, more performant, and lower risk model of running the games on the client, whether it's a console or a PC.

AFAIcantell they only do PC games (or ports), so they don't have that problem. They probably won't deal in specialty hardware, that would be a nightmare. Just standard, out of the box hardware that can contribute to their overall processing power even 5-10 years later.

That would definitely mitigate some of the risk, but I'd imagine they'd have to steer clear of new games that push hardware too much - even if every system running the same game runs it from shared memory, it's still optimistically one processor per connection. They're also likely to run into the same problems that Netflix is having with ISPs, but even harder, without caching as an option. It's like they tried to conjure up the least scalable application imaginable... well, props to them if they pull it off.