Well PSVue is not doing well at the moment:
According SIE head Kodera, he recently stated at an investors meeting "PS Vue is facing harder-than-expected competitions. Vue and PSVR would aim for further growth with realistic outlook."
In other words, aiming for "realistic outlook" equals the PSVue is not doing well.
We already have Hulu, Netflix, even Sony's Crackle and others on the Xbox. I don't see how a similar feature like PSVue on the Xbox. would have any better luck than PSVue itself is having on the PS4
Now, perhaps if Microsoft had a device that was all streaming (full Xbox games, music, video – all bought and sold – including especially “Movies Anywhere”, and yes streaming TV like PSVue) it could be a killer device. The games would be streaming like PSNow – but actually without compromise (which Microsoft is working towards anyway) And the device as a whole should not be designed around the game console features itself as the central hub, it might work. The problem is that thing you are proposing in order to be successful (worth the MS investment) must be ready for those less tech-minded crowd or for those where media is the primary consumption, not gaming. Not an Xbox only option. That would end up like their streaming music service, abandoned. That means this separate device would have to be a one that has a much easier interface for the general public. The current Xbox UI is overwhelming for people not use to the Xbox interface and can even be overwhelming to those that are used to the Xbox interface, The Xbox One UI is not really designed for making it a streaming-only box (get rid of all the social features – or tame them down - would be a good start). Of course, this device would have to be much cheaper than the Xbox. That shouldn’t be hard mainly because it would primarily have no local storage or need not as much memory – or more expensive CPU or Video– all streaming features remember. It would need to have a true remote included. (e.g. Apple TV – but better). Not a device that was using a game controller for interaction - which for most people like my wife or when my parents come over and want to watch Netflix, find navigating by a controller is not the natural way they are accustom to. That is how a system would best meet the needs of a larger population not just a small subset of Xbox One console gamers.
I am not discounting that this MSVue (copyright me :grin
couldn’t be built as part of the Xbox game console. Another app as part of the Xbox itself. But being integrated into a dedicated console as the only option would not lead to a successful outing as Sony is finding. The integration into a dedicated gaming console would only be a piece of the puzzle. Microsoft needs to make this popular by owning a device like an AppleTV for a pure streaming option. But make it lower cost device, like Amazon devices. Make money of selling services. The main advantage is that it will have game streaming (real games – not Candy Crush) from an Xbox game streaming service as well as MSVue. That would make the service a winner. We know Nadella is all about the cloud and has aspirations of game streaming. This would be a great way to spread those additional services, like streaming Gamer's Pass games, MSVue, and more. But, catering to just those that have an Xbox would have limited returns like PSVue. Perhaps work out deals to integrate the whole package of this smaller device into SmartTVs. Make it so before Google Android takes over by integrating their own streaming services, which will include real video games streamed to those Android TV devices. You will not win unless you cover all the bases and do it all at once not in a slow methodical way (often losing strategy).
Oh, and don’t announce this product 18 months before you release it. Don’t let the competition outflank you. God, Microsoft never learns. Announce it, then have it on the market immediately. Plan for a long fight. Continue to support it. And support it. And support it. Update it. And support it. And update it. And support it. You get the point. Don’t abandon it. Both Microsoft and Sony are probably the only two companies that can actually provide the most complete streaming option. Because they have the one element competitors like Google or Apple or Amazon don’t have a true gaming system (with a large catalog) to build into a complete streaming option (video, music, gaming, TV, plus third-party apps). And with Microsofts strong data center presence worldwide they can easily ratchet this service up worldwide. And that is a major key as well. Don't' take several years to go outside the US. Any planned streaming system should be competing immediately in the US (yes you too Canada) along with Europe and as many markets as you can on the service/device release.