Valve Pledges to Enter Videogame Console Wars With “Steam Box”

Valve’s co-founder Gabe Newell is grabbing big headlines at this year’s CES — without even trying.

Screen Shot 2013-01-08 at 7.52.47 PMThe former Microsoft exec turned gaming entrepreneur didn’t rent out a hotel ballroom or hire Big Bird or Maroon 5 to get the attention of the press. In fact, as far as we know, Valve’s only presence at the show was a small private booth for meetings, and an interview with The Verge.

But since many covet Newell and his quirky company, when he speaks, everyone listens as if it were videogame gospel.

Valve is popular for producing mega hits like Half-Life and the Portal game series. It also gets huge props for Steam, its consumer-focused PC games-distribution platform (referred to by the rest of us as an app store).

This preamble is to help you better understand why it was a big deal when Newell said yesterday that Valve is building its own hardware that will essentially be a gaming and media hub for your whole house.

This isn’t some half-baked Kickstarter idea. With an estimated valuation of $3 billion, and more than 50 million users (in comparison, Xbox Live has 40 million), Valve has the money, the distribution system and the clout to try something outrageous.

And what Newell described to The Verge yesterday is a little out there.

He confirmed that the company is building a “Steam Box,” which will be a game and entertainment server for the home that can be used by eight TVs and eight controllers at one time.

For the average consumer who likes to stream Netflix to their TV, this will come off as pretty abstract stuff, especially when you hear more details.

First, it’s going to be built on the Linux OS, which is not exactly mainstream. Second, if not done absolutely correctly, hooking it up to multiple TVs sounds like a networking nightmare. Third, Valve says it will be inventing new types of controllers “that use a lot of biometric data.”

In July, Newell was interviewed onstage in Seattle, where he elaborated on this topic. He said touchscreens are “short-term,” and that your tongue is one of the best mechanical systems to your brain. “I don’t think tongue input will happen, but I do think we will have bands on our wrists, and you’ll be doing something with your hands, which are really expensive.”

In other words, we’re talking really sci-fi stuff here.

Generally, what’s interesting about Newell’s desire to build something on Linux is that he believes it is a hedge against Windows 8. Increasingly, operating systems have become locked down, where the OS maker, like Apple, owns the software distribution on the device, like the iPhone and the App Store. That’s happening on laptops and computers, as well, which is a threat to Steam.

On multiple occasions, the former Microsoft executive has disclosed his disdain for the software giant’s new operating system.

In the interview with The Verge, Newell put it bluntly: “Windows 8 was like this giant sadness. It just hurts everybody in the PC business … When I started using it I was like ‘oh my god …’ I find [Windows 8] unusable.”

Newell can say pretty much whatever he wants. Valve is a privately held company with few or no investors, so there’s no pressure for a public offering or a sale. Clearly, if he wants to preannounce something, he will.

In addition to laying out some of the Steam Box’s specs and confirming its existence, he also discussed pricing. The boxes, which will be built by partners in some cases, will have three tiers, he said. The low-end device will start at $99. A midrange device could cost around $300, and the high-end device could be even pricier.

But when a Steam Box will be released remains a mystery. Presumably, to be competitive with the next generation of consoles from Microsoft and Sony, it would be expected around the end of this year.

To get some feedback on what Valve’s plans mean, I asked Pete Hawley, co-founder and chief product officer of Red Robot Labs, what he thinks. Although he’s creating a location-based games platform today, he previously worked at PlayStation, and just a month ago told me during a conversation that he thinks Valve will win the next console war.

“I think this news is huge,” he said. “Gabe and Valve are building something amazing here.”

Hawley also said that while the experience Newell describes today sounds futuristic, he could easily imagine the box appealing to a wide audience, ranging from everyday users who want to stream movies through a browser to the most hardcore gamers.

“The openness and ‘hackability’ is there for those core users that are more heavily engaged — the creators. I think you’ll see some users that absorb content, plugged into the TV like a traditional console,” Hawley said. “Others will run servers, create content, have their own store, push to multiple screens, etc., etc. I think its flexibility in that sense is really interesting.”

One daunting challenge, which Newell acknowledged in the interview, was getting Steam’s current content to work on Linux. This summer, Newell mentioned wanting to make it as easy as possible for the 2,500 games on Steam to run on Linux. Valve will also have to work on a way to get the content to work with a game controller. Since most of the titles today run on PCs, they use a mouse and a keyboard. As Newell told The Verge, “the problem to solve is how to interact with a Web browser, how to get all the games to support controllers, and how to make it all seamless.”

In the meantime, Valve has developed a feature called Big Picture, which allows you to connect Steam to your TV. Big Picture is designed to be used with a traditional game controller, but also supports a keyboard and mouse.

Here’s Valve’s video explaining Big Picture, which may also provide a sense of how Steam Box will eventually work:

Latest Video

View all videos »

Search »

There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google