Steam Box Part 2: Challenges
Last week in Part 1 we discussed what Valve has been working on. If you missed last week’s article you can find it here. The big question going forward is how much success Valve will have. Long ago Valve proved that they can make fantastic games. Their Steam platform is the obvious leader in the digital distribution market. However, their new plans fall well outside of their comfort zone and are certain to bring some serious challenges.
One obvious major challenge has to do with hardware. Valve has always been a software company and hardware is a whole new ballgame. A lot of Valve’s recent success has been tied with Steam – a product which anyone can freely download on almost any home computer. As such there is a very low barrier for new consumers to start using Steam. Also, with digital products you don’t have to worry about things like managing inventory levels.
Microsoft’s Phil Harrison recently issued some words of caution to Valve on the subject. Although everything he said has to be taken with a grain of salt due to the fact that the Steam Box will be competing against Microsoft, he does make some good points. Getting into the hardware arena means spending lots of cash on R&D and then tying up lots more cash to produce physical product. Unlike software where bugs or other problems found after release can be quickly remedied with patches, hardware releases need to be final. Microsoft was able to swallow huge write-downs when they were practically forced to extend Xbox 360 warranties because of all the Red Ring of Death problems. Valve is doing well, but it definitely couldn’t weather the type of financial hiccups that Microsoft can.
The second major challenge has to do with content. The Steam Box will run on linux. This means that only games available on linux will be playable on the Steam Box. While the list of games on Steam available on linux continues to grow, things are still looking pretty scant. This is an area where Valve is absolutely at the mercy of other developers. Unless other developers release their games with linux support, Valve will have an uphill climb. The way its looking now, Valve looks like they’ll try and get all their big first-party titles on linux and there seems to be a somewhat growing level of support from indie developers to release their products on linux. That’s not going to be good enough. Microsoft’s and Sony’s consoles will have all of the AAA releases. If these AAA releases aren’t available on the Steam Box then it won’t be successful.
The third major challenge has to do with competition. If the Steam Box was ready for prime-time a year ago, interest would have been very high. The current consoles were already getting long in the tooth and there was still a lot of uncertainty regarding future console refreshes. The Steam Box could have been the only new and interesting thing out. Fast forward to the present time and 2013 looks to be a pretty big year for gaming. Nintendo just released their new console and it’s looking pretty for sure that Microsoft and Sony will be releasing their new consoles before the end of the year.
The release dates for all this new hardware haven’t been announced, but it looks like they could all be released at a similar time. Regardless of how appealing the Steam Box ends up being, the market will definitely be crowded. It’s hard to think of what significant market share Valve will be able to attain. Most of the people who are willing to purchase expensive new gaming hardware for their living rooms probably already have consoles and will probably be purchasing the new Microsoft or Sony consoles. After putting down a good chunk of money for a new console, it seems they would be less likely to put down another large chunk of change for the Steam Box. Add to that the fact that a lot of Valve’s most loyal and ardent supporters are PC gamers who are likely to remain content playing on their PC’s.
Valve needs to be able to convince both their loyal fans as well as new consumers why they need this product. The Steam Box is an exciting proposition, but Valve definitely needs to get a lot of ducks in a row for it to be successful.