Why Valve’s Steam Machine can’t be “subsidized”
Don’t expect Valve’s Steam Machine to have console-like pricing
Valve unveiled its new Steam Machine earlier this month, and everyone’s big question is this: how much will it cost? The new mini PC promises to be six times more powerful than Valve’s Steam Deck handheld, making it a powerful gaming device. Will Valve’s Steam Machine have its price “subsidized” like a console, or will its pricing be more like a desktop PC?
Traditionally, console prices are subsidized by their manufacturer. The consoles themselves are sold at a loss, and developers expect to recoup that investment with game sales. Console makers make money from each game sale. That offsets losses made by selling consoles at a low price. However, it’s worth noting that significant subsidies are no longer the norm in today’s console market. Given the popularity of free-to-play games today, console manufacturers are no longer guaranteed to recoup large subsidies.
In an interview on the Skill Up Podcast, Valve’s Pierre-Loup Graffais confirmed that Valve has no plans to make a loss on its Steam hardware. The Steam Machine’s cost will not be offset by revenue from game sales. Valve wants its Steam Machine to be a “good deal” for gamers, but that does not mean it will make a loss on its hardware.
Skill Up: So, it’s not going to be a sort of subsidized device, like, Valve is not going to eat a big loss on this so that they can grow market share or grow within its category. Correct?
Pierre-Loup Graffais: No, it’s more in-line with what you might expect from the current PC market. Yeah. Obviously our goal is to for it to be a good deal at that level of performance. And then you have features that are really hard to build if you are making your own gaming PC from parts. Things like the small form factor and the noise level that we achieved, or lack thereof.
Why Valve’s Steam Machine can’t be “subsidized”
At its core, Valve’s Steam Machine is a Linux-powered PC, not a console. If users want to install Windows on it and use it as a PC, Valve can’t stop them. They also can’t stop them from using it as a non-Steam device.
Valve can’t sell the Steam Machine at a loss. If they did, they would be giving buyers ultra-cheap hardware without the guarantee that it would be used to buy games on Steam. It could be a cheap mini workstation, an HTPC, or some other non-gaming device. Unlike a traditional console, there is no guarantee of additional revenue for Valve. There is no Xbox Live or PlayStation Plus subscription to guarantee revenue. The Steam Machine can be used for anything. If Valve sold its hardware at a loss, people would take advantage of that.
Valve’s Steam Machine will be priced like a PC, because it is a PC. This box gives users more freedom than any console can, which means selling it at a loss is not an option for Valve.
You can join the discussion on Valve’s Steam Machine pricing on the OC3D Forums.
