Editorial

Editorial: Valve and Microsoft's battle for gamers

Microsoft and Valve has been battling for the attention of PC gamers for a long time. So far, Valve has come up on top. Now, it's looking like Valve might be going after the console game space, but using the same ideas and philosophies that have taken the company to the leadership role in PC gaming.

Ironically Valve's very existence is due indirectly to Microsoft. Valve's co-founders Gabe Newell and Mike Harrington worked for a number of years at the company. Newell has said he was a producer of the first few versions of Windows during his 13 years at the company while Harrington worked on the Windows NT team. In 1996, both men left Microsoft and used their hard earned Microsoft money to fund Valve. (Harrington decided to leave Valve in 2000).

In 2004, Steam was introduced with the launch of Half-Life 2. While the concept of downloading and purchasing full commercial PC games wasn't new, Steam offered other services such as automatic downloading of game updates, pre-loading games before they were released and more. In fact, Valve marketing head Doug Lombardi said in a 2008 interview they tried to get other companies to offer such a service, including Microsoft. None of them were interested so Valve decided to do it themselves.

While there were lots of issues with Steam when it launched, Valve learned from their mistakes and after several months the team got Steam to work efficiently. The end result was that by January 2012, Valve had over 1,500 games available to purchase and download on Steam. The service now has over 40 million registered users and has reached over 5 million concurrent users at once. Over 400 games now use Steamworks. Many game developers and publishers feel that Valve and Steam saved PC gaming and helped to transition the industry from a retail store-based environment into one where downloadable PC gaming is becoming the norm.

Meanwhile, Microsoft found out quickly that the company's own Games For Windows Live service was not attracting as many PC gamers as Steam. Microsoft tried to change its user interface and add features and third party games to the mix but in the end Microsoft ended up integrating the Games For Windows Live web site into its own Xbox.com site.

So what's the lesson here? Mainly, it's that Microsoft marginalized the PC gaming industry for several years. Meanwhile, Valve knew that the PC game business wasn't dying; it was simply changing to embrace downloadable games and other business models. Valve struck first and now Steam is the number one destination to purchase PC games.

A few days ago, I mentioned that the Windows Store feature in Windows 8 could be a major threat to Steam. That's still possible. Indeed, Microsoft is bringing the Xbox Live service to Windows 8 in an attempt to bridge the gap yet again between the Xbox business and the PC gaming community. It remains to be seen if that effort will be successful; only time will tell.

But since that editorial was written, there's been yet another new development. Credible rumors suggest that Valve is trying to work with hardware makers to create specifications for a "Steam Box", a desktop PC but with the small size of a console that would be able to run PC games, perhaps on a big screen TV similar to a console like the Xbox 360.

Newell said in a recent interview that while Valve doesn't really want to enter the hardware space, Valve feels the company might have to so Valve can "continue to have innovation." The next logical step in bringing PC games to an audience that is used to playing games in front of a big screen TV is making a product that would have all the characteristics of a console machine but still be a true PC with an open hardware and software platform.

In other words, Valve might be trying to bring the company's philosophies in the PC game software space to the console hardware industry, and that also means yet another direct battle with Microsoft, which again helped to create Valve thanks to the company's ex-employees and their Microsoft funds.

Valve may not want to get into the hardware space, but Newell and the rest of the company clearly sees that the closed garden approach to console gaming, such as the Xbox 360, has a number of issues. Game developers have to go through Microsoft's approval process to get patches and content updates to their games. They also have to pay a license fee to even get their console games published. That's certainly not true of a PC game system.

For consumers, they could be stuck with a console that for the most part is not upgradable in terms of hardware. They also won't have the freedom to download as many games from third party developers and publishers as they would from a PC system.

The idea of a console-like PC system, something similar to what Alienware recently launched with its X-15 PC, is hugely appealing, if it handled in the right way. It should be able to combine the best aspects of a PC (open system, upgradable hardware, more games and game innovation) with the advantages of a console (small form factor, playable on big screen, more easily affordable).

The nice thing about the "Steam Box" proposal is that Valve already has a business model that has been successful that the company can follow: Android. Google's mobile OS has allowed lots of smartphone hardware developers to release Android devices based on a system that is more open that Apple's much more closed iOS system. The result is that Android is now the leading OS for smartphone makers and the Android Market (now Google Play) has become a true rival to the iOS App Store.

There's no reason to believe that Valve couldn't make a dent in the console game space with some kind of PC oriented game machine. That's a prospect that could be making some people at Microsoft, and indeed the entire console game industry, very nervous right now. We can't wait to hear when and if Valve will reveal more information about the "Steam Box". More importantly, we can't wait to try it out for ourselves.

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techguy77 said,
Games for Windows Live on PC sucks and needs to gtfo.

I hear ya! Too many headaches, not much to gain out of it.

A Steam box sounds like a winner to me. It already has a massive catalogue and base of users.

But Valve - Please release Steam for Linux

I don't see the point of that. Even if they did, you wouldn't be able to play almost every game on it and they would have to update that as well. Not going to happen this year.

there was no battle for pc-gamers, in my opinion. Microsoft released a half baked games for window live brand and then never did anything to support it.

Alienware recently launched with its X-15 PC where?, all I see a X-51 for $700, By the way that not what I call upgrade by any means think of the X-51 is more of an over price laptop that come with a major under power video card you can build far better more kick a$$ system.
AMD Radeon HD 7850 $250
AMD FX-4170 Zambezi 4.2GHz $140
AMD 970 Motherbosrd $90+
A good brand name 650W Power Supply $70+
8GB (2 x 4GB) 240-Pin DDR3 1866 Desktop Memory $50
1TB 7200 RPM SATA 3.5" Internal Hard Drive $115
Antec Three Hundred Case $60
21.5" or 22" LCD Monitors $130
Keyboards & Mice Combo $25
930+ S/H this kick the carp out the Alienware X-51, nVidia GeForce GT 555Mobility GPU

LOOOL Comparing an AMD processor to an I7, really?
Also, you are comparing a desktop machine to a ****ing laptop. Not exactly the same thing now are they!

ahhell said,
LOOOL Comparing an AMD processor to an I7, really?
Also, you are comparing a desktop machine to a ****ing laptop. Not exactly the same thing now are they!

You do not get i7 for $700 you get a i3 with even slow GeForce GT 545 GPU but if folk out $1150 with no mouse nor a keyboard or even a Monitor then you get the HotRod i7 with tab faster GPU other that it not very customize at all other more memory.

SHS said,
Alienware recently launched with its X-15 PC where?, all I see a X-51 for $700, By the way that not what I call upgrade by any means think of the X-51 is more of an over price laptop that come with a major under power video card you can build far better more kick a$$ system.

AMD Radeon HD 7850 $250
AMD FX-4170 Zambezi 4.2GHz $140
AMD 970 Motherbosrd $90+
A good brand name 650W Power Supply $70+
8GB (2 x 4GB) 240-Pin DDR3 1866 Desktop Memory $50
1TB 7200 RPM SATA 3.5" Internal Hard Drive $115
Antec Three Hundred Case $60
21.5" or 22" LCD Monitors $130
Keyboards & Mice Combo $25
930+ S/H this kick the carp out the Alienware X-51, nVidia GeForce GT 555Mobility GPU

I agree entirety...

It would be a nice addition under the TV. It doesn't really damage MS as all these SteamBoxes will end up running Windows anyway and I am sure MS will continue to force Games for Windows onto a number of titles as they do already.

I hate Valve with a passion. I hate Steam. They ruined the Half-Life universe and ruined Team Fortress. I hope Valve DOES sink a ton of money into this stupid console venture and I hope they lose their shirts and close their doors. Good riddence to rubbish!

ScubaDog said,
I hate Valve with a passion. I hate Steam. They ruined the Half-Life universe and ruined Team Fortress. I hope Valve DOES sink a ton of money into this stupid console venture and I hope they lose their shirts and close their doors. Good riddence to rubbish!

And you points is what, I like Half-Life so what there no EP3 get over it and as for Team Fortress I take your ref to the fact that it now free where you paid for it just like a lot other people even me did to with it so what your childish point all about if not that?..

ScubaDog said,
I hate Valve with a passion. I hate Steam. They ruined the Half-Life universe and ruined Team Fortress. I hope Valve DOES sink a ton of money into this stupid console venture and I hope they lose their shirts and close their doors. Good riddence to rubbish!

It's not healthy to be that bitter.

Stop being a drama queen.

I really doubt Valve could make a PC box that could compete with the consoles. Consoles are optimized and subsidized by the manufacture. Its just not going to happen.

Melfster said,
I really doubt Valve could make a PC box that could compete with the consoles. Consoles are optimized and subsidized by the manufacture. Its just not going to happen.

When the PS3 launched it was ~$600. If they release the steam box at the same time as the next generation of consoles they could very well be competitive, price-wise at least. If the steam box runs windows 8 it will probably be very similar to the next xbox and have a nice big interface that can be easily accessed from the couch. Big screen mode in steam will probably be a metro app.

You can make a kick-ass PC with $350 these days if you buy the components in bulk. Components far better than anything today's consoles have. Valve could sell the Steambox at cost price and make up the profit on the games.

I think the question that should be asked is what platform is this console gonna run - windows or linux based? Of course, most games require d3d from windows. Though a linux option could shake up the pc games industry.

ShMaunder said,
....

With a greater number of games being built using cross platform game engines, I don't see why not.

Base it on linux. 2012 is the year of the linux gaming system!

dotf said,

With a greater number of games being built using cross platform game engines, I don't see why not.

Base it on linux. 2012 is the year of the linux gaming system!


That not going happing if take in to count that 97% of the games are Windows and 2% Mac and 1% Linux.
Why think all cool one that started out on Linux have been ported to Windows.
Now before whine there WINE that just Compatibility Layer and is far from 100%.

SHS said,

That not going happing if take in to count that 97% of the games are Windows and 2% Mac and 1% Linux.
Why think all cool one that started out on Linux have been ported to Windows.
Now before whine there WINE that just Compatibility Layer and is far from 100%.

Though dotf has a point with the cross platform engines. I couldn't imagine much work is required to get the current "Steam Play" titles compiled to run under Linux (in fact, they may already be, just not public). They already use OpenGL. There are currently 468 game titles that are listed under as "Steam Play" - i would imagine these games are already Linux compatible or near. I would guess that 468 titles is enough to introduce the box to the world and possibly Valve launching a big title with it (e.g. Portal 3 / HL3) may be enough.

As for Wine, Valve legally wouldn't risk shipping that on a box in any case.

They would have to go full console in order to compete. I just don't see them making a PC game compatible set-top box that can be competitive at all with Microsoft, Nintendo and Sony. It would be too expensive, unoptimized, and non-standardized.

I think a lot of people are missing the point when it comes to the "Steam box".

It's certainly not a console and won't be trying to compete with consoles, rather it'd be more of a set-top box / HTPC that can bring PC gaming to the sofa.

Look at the phones of today and the phones of 2000, they've completely absorbed the camera and MP3 player of old. It's going to happen to consoles too. At some point, consoles will die out and the PC will become a seamless device over the entire home.

Thinking about the Steam Box more, if it tries to sell itself as a fancy gaming HTPC disguised as a console, what price point are they setting this at for it to be competitive with consoles? PCs are getting cheaper, but specs wise, can it be as cheap as the other consoles sold at a higher loss to consumers?

If the price is too low, Valve and its hardware partners run the risk of not making back their initial investment, for the hypothetical scenario of people buying Steam Boxes in droves - a powerful PC for a very low price point - and proceeding to install their own software on it, or not use Steam, in case they don't plan to game on it.

Of course, if it's priced too high, then it'll be a niche like that Alienware gaming PC.

The specs aren't much of a concern, especially if it comes to Valve games. As an example, my PC setup was pretty good when first built four years ago, and there hasn't been a single game that would render the system unacceptable for decent gaming performance. Even then, people would only need to upgrade the graphics card if it came to that, and the Alienware system is an example of how easy it would be to swap out the card for any decent replacement off the shelf.

The steam box sounds like a top idea. What I think would take off though is maybe taking a boxee type approach.

Offer their own steam box solution while providing the controller hardware separate and of course the software (steam is already around) to make it all work.

They could even push it a step further and have "steam box recommended" hardware for people wanting to build their own system.

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