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8th Generation Wars: A 'Console' Challenger Appears
by Oliver Teckert on 12/12/12 05:56:00 am   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

Valve has recently announced their intention to enter the next console war with the Steam Box, a new custom PC designed to go head-to-head with next-gen consoles from Microsoft and Sony.

A quick look at statistics on Steam’s Wikipedia page (Steam - Wikipedia) shows that as of November 2012, 1800+ games are available through Steam to an active 54+ million accounts. Concurrent users peaked at 6+ million on Nov 25th, 2012.  Now, Valve wants to enter the console market. To rephrase that:

Valve, the 1000 pound gorilla of digital distribution for PC games, has decided he wants a piece of the console pie. Maybe even all of it. Gorillas are not known for restraint. What implication’s does this hold for the future?

Mean Gorilla

1800+ gaming titles will presumably become available to the console market through the Steam Box. Although a percentage of these games are readily available on existing consoles, many however are not. This inevitably leads us to the next point,

Steam is known for holding regular sales which offer deeply discounted titles for direct download. The sheer size of the discount amount, upwards of 75% off, offered on both regular titles and packaged bundles of games, far exceeds anything you can find in a traditional brick and mortar store. 

This means on the Steam Box you, the consumer, the video game connoisseur, will potentially pay significantly less for video games than you currently do; and all from the comfort of your own home.

Of the 54+ million Steam accounts, there are undoubtedly a significant percentage of users that own at least one console. The Steam Box gives those users the option of playing their games on their TV, independent of their PC.  This begs another inevitable question,

The current console market is heavily saturated with titles with the majority breaking even on their production costs, or failing to achieve even that. This means that a small percentage of games are actually profitable, and a very, very small percentage of released games are actually sales blockbusters (i.e. Call of Duty: Black Ops, 25+ million copies sold worldwide for $1+ billion in sales).

So with those points in mind, what is going to happen when the Steam Box arrives as a console? It brings along easy access to 1800+ titles, many of which eventually become deeply discounted. Console games are already facing pricing pressure from the glut of social and mobile games which have flooded the market in recent years. 

This has created tremendous price pressure to offer premium games, with high production values, for only a few dollars. Steam will bring with them 54+ million active accounts, many of which have games already on their Steam account, which they will now be able to play on their TV with their existing social network of friends.

This begs the question: How will Microsoft and Sony react when a title is simultaneously released for all three consoles, but Steam offers you a discount since it is downloadable and does not have to deal with the physical distribution of the disc?  

This scenario does currently happen.  On Steam, the recent release of Hitman: Absolution saw users able to preorder the game for a 10% discount prior to release, however after the release date the game went back to its full retail value. 

Why stand in line for hours outside in the rain to purchase a game for full retail value at midnight (or later depending how far back in the line you are), when you can purchase the game at a discount, pre-install the game, and download a small patch at midnight and be playing by 12:05 all from the comfort of your own couch?  

There are signs that Microsoft and Sony want to raise the price of premium console games to help recover the ever increasing costs of AAA title development, however that could become difficult given Steam’s pricing models and the situation described above.

The confirmation of the Steam box entering the console market comes at a time when OUYA has received $8.5+ million dollars in funding from their Kickstarter campaign (OUYA), and amid constant speculation that Apple is thinking of joining the console wars in one form or another.

Who will reign supreme in the next-gen console war remains to be seen, however it is shaping up to be a hell of a fight for your entertainment dollars. One in which gamers’ are poised to be the clear winners.


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Comments


TC Weidner
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computer games often require keyboards, the living room and its furniture do not allow for comfortable use of keyboards. I dont get why everyone and everything has to continually reach for markets they arent suited for. Steam is doing what it does very well, be happy with that and continue to concentrate in that area and own that market. I just dont get this fascination with the family living room as some type of holy grail.

Why do actors want to be singers and singers actors. Do what you do, and do it well and be content.

Leonard Herndon
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A lot of games now-a-days are controller/gamepad compatible, so the whole keyboard thing is not that big of an issue anymore. Sure, you will have some games that will be better suited for a keyboard and mouse. Every game on my steam account can be played with a controller. The bundles and sales that they provide will definitely put pressure on pricing for the console guys. Those points on top of the fact that I will not have to pay another $10/month to play these games online, gives valve something to contend with.

Devin McCamey
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Another possibility is that this "Steam box" could support wireless keyboard input. Or some other type of larger game board that isn't as cumbersome as a keyboard. This would work for games using only keyboard controls.

Additionally, steam is actually in a relatively good position to do the console addition to it's family. For instance, it'd be really cool to play Trine 2 in the living room with my friends right there or over the net.

Keep in mind this is also great for indie devs such as myself because it opens up my game's possible audience to people who don't have fully decked gaming rigs, but like owning a console in their home for family game night or what have you.

A W
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But you can play Trine 2 on the Wii U with friends in your living room and over the net, and you don't have to take up your TV to do it if its over the net. I still don't get this devices need or meaning.

Tom Baird
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@A W
But then I need a Wii U, and I have to pay for a copy of Trine 2 that ONLY works on the Wii U, keeping in mind that the Steam version is easily installable on any computer with Steam (log in with you account, press install).

As well for price comparison of Trine 2 Director's Cut:
Steam: $24.99
Wii U (Best Buy): $59.99

Being able to play Trine 2 in front of any TV, or any computer, means I can use my TV when it's available, my computer at home if no-one is using it, someone else's computer or SteamBox, or my computer at work if it's a slow day/lunch.

k s
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@Tom Baird if I'm not mistaken Trine 2 Director's Cut on the Wii U's eShop is $19.99, I'm not sure about retail because I haven't seen it for sale at retail here in Canada.

Oliver Teckert
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I think the market division is really at the heart of why Valve wants to bring the Steam Box to market as a console. Why is the markets divided in the first place? If its about a keyboard and mouse vs. a controller, is that not an issue that can be intelligently addressed and solved? If Valve thinks they can unify the PC and console markets for gamers then that is a tremendous opportunity for not only Valve, but gamers as well. They get a larger market share and more consumers while gamers get a unified gaming network and a larger portfolio of games at lower prices. Win-Win?

Tyler King
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I bought Trine 2 for less than 5 on the last sale, not the directors cut mind you, but still less than 5. Also I grabbed Arkham City directors edition for 7.50 and Castle Crashers 4 pack for 15. The only games you are missing out on is platform specific like Halo. Everything else is there, but for much cheaper.

Bob Charone
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Keyboard, racing wheel, and fighting stick is a non-issue, most people play FPS, racing, and fighting game on consoles with their gamepad. Just check the sales numbers for your favourite core/hardcore game.

I think generation plays a part too, older guys have a hard time with gamepads, while kids play with touchscreen as good as I can play with gamepad, and their kids will be playing easily with virtual reality!

A W
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I'm just very confused by this product. I understand that you keep stating that Steam has 54+million users and 1800+ games, however what is the point of making a new hardware device to go in your living room when if you already have a Steam account and a decent computer to play the games on. Would not you just stick with that than possibly needing to buy / rent another set top box. It seems redundant.

It seems more like them trying to put another store front option right in your living room. It would be just as bad as Netflix trying to place yet another box in your living room that will provide the same services it already achieves from any other box / computer / console device that can use the service.

I just don't see this announcement as the second coming. I mean why would I want to pay for another box (possibility rent another box) for my living room, if all it offers is a store front for Valve and its partners? Why lock the tech to one box when you got the PC market that never has a lock down in specs and can always upgrade.

This box is not geared toward the people who already enjoy Steam on their PC, its geared toward the people who don't care to use a computer to use games. I find it hard to believe that Valve is going to get those people to play games on a computer if they don't care for it by placing a store in their living room that serves no other purpose. This sounds like the Phantom device.

It would be better they pair up with Microsoft's next Xbox and call the system Xbox Steam or XSteamBox or something. But given the news about the Windows 8 disappointment in the developer community, it seems like this is the response to that feeling of being irrelevant on PC in several years.

Tom Baird
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I disagree about pairing up with Xbox.

Comparing the current XBox digital platform to what Steam offers, XBox live is a huge downgrade. Less games, that cost more, that are less portable, for a subscription cost. Steam would have to make so many sacrifices to get their games on XBox, that they are going to end up with a service just as bad as what Microsoft offers.

If Steam releases a competitively priced console, MS's current pricing and models are going to look like garbage in comparison, and so Steam has a viable chance to taking a HUGE chunk of the console market if they do it right. If I can buy a game for 10% off, pre-release, and install to both my computer and console simultaneously so it's ready on launch day, and have cloud save files for both platforms, and know that I won't lose these games when there is a new console, and not have to pay any subscriptions, and have a massively higher amount of games (and variety of genres, production values), I'm going to take it.

The idea of a SteamBox is simply that many people either A) Have their computer not right next to their TV and so have difficulty using it for both, B)Use their computer and TV at the same time, meaning you can't play games on the tv and have someone else use the computer to work C) Don't realize that you can just buy a computer to put next to your TV without ever using a monitor, and so rely on consoles to play their games on TV. Some people do already know this and run Steam's Big Picture, but they realize that a lot of customers can be sold by doing the setup for them and selling them a 'computer as a console' pre-installed and setup to run as a set-top box, (pretty much what the consoles already are).

Oliver Teckert
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I have to agree that the idea of buying a ready made gaming solution that is essentially a custom made console as powerful as a PC, but far easier to setup and manage, is very intriguing. What Tom mentions as a 'computer as a console' is a great option for people that don't want to fuss with PC parts or setting up drivers and software. A ready made solution is innately more accessible and appealing to a large part of the market.

Vin St John
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They are not trying to get people to "play games on a computer," they are trying to get people to play games on a SteamBox. That's the whole point - it's all just positioning/marketing - if they show how easy it is to navigate and control with a controller, they can potentially market it to folks who buy consoles for precisely that reason. This obviously benefits Valve. Others might get excited because it will mean a furthering of the Steam platform that they currently enjoy on their PCs.

Dave Ingram
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@A W
Good points, but I think the TV comes into play most heavily here. One of Ouya's main selling points, in the words of their CEO, is that "The TV is still the best screen for playing games on." This is the major reason to release a console box in addition to a PC platform. - the difference is in the user experience (recliner and huge screen far away vs. computer chair and smaller screen right in your face)

Oliver Teckert
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The user experience between the PC and console is vastly different as you mention. I sit in an office chair and stare at my PC screen all day, as do most people. I don't want to continue doing this at home in my gaming time. Its cramped and uncomfortable even with dual 22 inch widescreens and a good chair.

Relaxing in front of a large screen in a comfortable chair or couch is much more preferable.

Jonathan Jennings
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maybe I am naive but the possibility that steam developing a console competitor could reduce game prices of the other console developers excites me . when I was a pure-console gamer there was nothing more disheartening then hearing about the great 900% off sales steam would host for games I was still waiting to cost less than $40 on console. I would hope such sales owuld still be possible on a device like this.

Michael Joseph
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I never got into Linux. Is distro app compatibility a problem these days?

Is one of the selling points behind the Steam Box that it will provide a specific Linux distro for developers to target?

Oliver Teckert
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The OS is still a giant question market at this point. The apparent front runner seems to be a linux distribution but at this point, I don't think you can rule anything out. Except Windows 8. Gabe seems to really dislike Windows 8.

k s
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I don't think valve will be able to break into the living room, they are a PC developer and people who play consoles don't care for PC gaming. Sure they have sales but that alone wont help them especially if this "steam box" costs as much as a gaming PC ($400+). I see Ouya having a far better chance at making a space for itself in the living room.

Oh and we don't need yet another closed platform in the gaming space!

Jacob Pederson
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1800+ games?? This is simply not possible with a Steam Console. Valve is absolutely not going to pay for a Windows license for each of their steam boxes. This means Linux will have to be the OS, which limits the amount of games to more like 38. That's a two-digit number, not a 4, making it much more like a traditional console release and MUCH less like a Gorilla. Granted, if SteamBox becomes a reality, then more and more games will be coming to Linux; however, it will be a tough road for Valve, as OpenGL is not DirectX.

Ilya Belyy
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They easily can bump the number by a few hundreds using WINE, although certainly not to 100%. I think some ancient games on steam already use dosbox in this fashion.

Oliver Teckert
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The huge obstacle to bringing over Steam's huge game catalogue is going to be the OS, which as you mentioned is almost certainly going to be Linux (Given Gabe's distaste for Windows 8). If the Steam Box doesn't run DirectX, going for OpenGL instead, that is going to mean a tremendous number of titles wouldn't be easily portable. If they chose to look at WINE or another solution remains to be seen.

Bringing over as many titles as possible to the Steam Box is an important strategic move for Valve, so I imagine that they will investigate all possible options very thoroughly.

Toby Grierson
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Transgaming or whatever they're calling themselves now offers a Wine-based kit to make native builds of DirectX software on Linux and OS X.

Jaco Gerber
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Not too sure where you get your 38 from. There are around 70 Linux titles listed in the Steam CDR database right now, and that excludes a lot of titles that already have native Linux ports. Granted, it's unlikely that they'll get 1800 games all ported to run on Linux.

Also, Toby Grierson, if Valve has any sense they would avoid Transgaming's product and rather use a straight winelib-based solution. This would fall very much in line with their general manifesto of getting involved with any open source projects that could benefit Linux as a gaming platform.

Steam's Linux beta application form did ask the question "Do you use WINE for..." so it would appear as if they are looking at that.

Oliver Teckert
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I think the main point is that Valve has options that are available in the market today and could investigate their own internal solutions. Its certainly a challenging, but surmountable problem with tremendous upward potential.

Joshua Hawkins
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Breaking into the "high end" console market today is harder than ever. There's a lot of unanswered questions pertaning the steambox which might already be addressed internally at valve, but solutions haven't been made public. Here's some stuff that needs to be answered if Valve is breaking into the console market and not just makring a branded Windows PC.

Let's start w/ the easy one. Where is valve getting their OS? It's not cost effective to use windows on these systems, and created an OS on your own is going to require some major planning. One of the my major conserns would be API's. Every console uses it's own library of API's, and PC games tend to use the directX library which Valve would have to liscense from microsoft. I have no clue how much this liscensing costs, but I bet it ain't cheap or somebody would of done it by now. Valve could create their own API libarary but that would require reprograming every game available for the steambox. Valve has shown favor for Linux, and has a few games that work on linux, but on the otherside of the coin linux has been very anti-valve when it comes to their commericial endevors on linux.

Next lets take a look at quality control. PC games tend not to have any governing body when it comes to quality unlike consoles. Steam has done extremely well keeping a handle on quality. I don't know if this is something they're activily doing, or it's just how their market works. Still it's always a good idea to have some sort of certification process to protect your users against malicious software. Console quality tends to be the highest because they have the ability to strictly control the software on their systems. So the question is will the steam box continue steam policy or will it create a new certification based system that the other consoles use?

Hardware questions. Will valve stick w/ the mouse/keyboard pc setup, are they creating their own hardware. What will the system specs be for the valve box, and how is this all going to effect price? As people mentioned before the keyboard mouse setup isn't really fit for a living room setup, and a controller isn't fit for PC gaming. Valve might have some sort of hybrid hardware they're working on, or they could let users decide. Still I don't think anybody will be happy w/ the final outcome. If Valve is going w/ medium grade pc equiptment I can't see the thing costing less than $400 which might actually be compedtive w/ next gen systems anyway. Still I feel that a system that low range isn't going to meet PC standards very long, and then you might have an extinct system that's not easily upgradible like a pc.

Still I hope Valve figures this stuff out cause they have a lot they can bring to the market, and even if they fail they'll like make Sony, MS, and Nintendo step up their game which is a win for consoles.

Oliver Teckert
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You touch on a lot of topics that are strategically critical to the success of the Steam Box that are largely unknowns at the moment. Some great topics for a follow up article...

I think a lot of gamers hope Valve figures out the answer to these challenges. Like you say, even if they are only partially successful it forces the rest of the industry to elevate their own game.

Vin St John
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Question from the uninformed: In what way has "Linux been very anti-valve when it comes to their commercial endeavors on Linux" ? I know selling DRM-laden games through a controlled marketplace is not exactly in-step with the open-source credo, but I've never thought of the Linux world as actively working to prevent this type of software from being sold.

Joshua Hawkins
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Lots of the recent Linux anti-valve action has been mostly verbal (similar to valve being anti-windows 8), and I wasn't really paying attention if these statements were being made by linux developers, or groups that own linux patents. I'm not really up to date on the current goings on of Linux, but w/ an increase of patent trolls, and companies building patent portfolios for profit it seems like bad business to rely on Linux. Very easily you could find yourself in the middle of having to pay egredious sums, and court orders to block your hardware. On the otherside Valve could be one of the companies buying Lunix patents, and that might be just the thing to pushing them into a 3000lb gorrilla for a lot more than digital distribution.

Alan Youngblood
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Price collusion is reaching its breaking point. The industry (read: Sony, Microsoft) can decide they want to move on, or fall victim to their own trap. This has already happened in the cable television industry. People have less disposable income these days and fixed prices are not selling them on things that they can cut out of their budgets. Steam actually already does a great job of not having price collusion and Sony does alright on PSN, although MS not doing well because their pricing is hidden behind nebulous "points."

The idea going forward is: know what your game is worth and its production cost. Price according to that. Not a fixed price like $60, the fact is most games are not worth $60, perhaps $20,40,50,80,70,120, but not always $60. While people are notoriously poor at judging prices, they certainly know when the pricing is "off."

Oliver Teckert
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You could argue that Valve's core competence is their flexibility in pricing. They are not afraid to offer tremendous discounts to spur large volume sales. Maybe this is a wake up call for Sony and Microsoft?

Adam Bishop
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I'll say this: I've been a console gamer all my life. I like only having to upgrade my hardware once every 5 or more years. I like knowing that any game I buy will just work. I like sitting on my couch. I like using a controller. And yet nevertheless I've bought more games on Steam this year than on my 360 and PS3 combined because Steam has put together a fantastic service and their sales give me an opportunity to try all sorts of games I wouldn't be interested in at their standard price. If they can bring out a device that gives me the things that I love about consoles and combines them with Steam's services? I would buy that device in a heartbeat.

Oliver Teckert
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As a predominantly PC gamer, the thought of being able to migrate my slothful ways to the couch and enjoy the same titles I do on my PC is very appealing.

Scott Woodbury
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I love console gaming for it's ease of use couch and controller on the big screen TV. I love PC gaming for it's scale-ability, precision and flexibility with Mods. I have been gaming for almost 40 years since it's public inception and gaming online since there was an online. There is not a "typical gamer" box you can put me in.

I backed the OUYA on Kickstarter.

I will probably get a Steam box if it can indeed mesh both PC and console gaming in a package that has all that I like about each. I can also see it replacing my desire for a PS4. I'm sort of getting tired of the "exclusivity" of the publisher, first party and back door dealings with PSN, Live, Origin, Uplay

It's all been a battle for control of a medium where we the consumers should drive the production not the other way around.

The next Box needs to focus on the best content delivery and user experience and not focus on content control and restricting users by locking them into one method of access.

Kirth Gersen
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too few infos on this to actually see where it is going.

I highly suspect a defense move from Valve, defense against the W8 Windows Store. they'll try to move the PC gaming away from Windows/Direct X to another OS, probably some Linux variant.

by entering the next-gen console war with a product (or platform) that can be either used as a console (plugged into the TV with controller(s) as interface) or a gaming PC (plugged into a monitor with kb/mouse as interface) they could rally a lot of game publishers around this. Even more if they provide a good engine (next-gen Source may be) and some exclusive titles (Half-Life 3 ?, Portal 3 ?, etc) to launch this.

as a dual gamer, console and PC, I'd really like to have a single platform for all my games, switching from one form to another as I feel.

Oliver Teckert
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You are hitting on a very good point, that the closed nature of the Windows 8 store could have definitely been the final straw that pushed Valve to decide that they were going to fight back against what they see as the proliferation of closed platform thinking. Its inconsistent with their past success and poses a scary reality for the future.

Also...dare I say they could use HL3 as a launch title for the Steam Box? That would be a crafty, brilliant kind of genius.

Erin OConnor
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How many games get released for the PS3? or the XBox 360? And how many publishers claim that they will not do a PC release because the market is too limited or piracy is too high?

What this says to publishers is "Your going to release a game and ignore 54+ million potential customers that play games on the PC?"

Oliver Teckert
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All of a sudden the bean counters in publishing could realize that they can make more money and incur less risk by releasing on the Steam Box since it would cover console + PC. There could be a substantial business case for switching the primary development platform to Steam.

Imagine how that would go over with Microsoft and Sony!

Alpha Diop
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[quote]
Why stand in line for hours outside in the rain to purchase a game for full retail value at midnight (or later depending how far back in the line you are), when you can purchase the game at a discount, pre-install the game, and download a small patch at midnight and be playing by 12:05 all from the comfort of your own couch?
[/quote]

Mostly for the social experience,

other than that the couch sounds better!

WILLIAM TAYLOR
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If this thing cost more than $400 then they are dead out of the gate imo. Also, I really hope they work with as many developers to guarantee that most games are certified for Steambox and that 100% of Steambox games just work.

They will have completely missed the point of a console like experience if people are having to tweak ini files to get games to run or if the forums are filled with stuff like, "the installer won't run" and "the game crashes at the title menu" and all the stuff I see when I goto forums for the few PC games that I play and pray that I never encounter on my machine.

Dave Hoskins
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They may have to sell it at a loss, to get the price down. Also, all those Windows steam games won't work as they are not written for Linux. It's not a simple recompile, especially if they use DirectX.


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