Valve has explained why it refuses to subsidize the Steam Machine, which launched yesterday priced at least $1,049.
IGN has an interview with Valve discussing the price of the hardware and the impact the ongoing ‘RAM apocalypse’ had on the company’s pricing plan. But ahead of this week’s announcement, some had called for Valve, which earns billions of dollars in revenue each year through PC games platform Steam, to subsidize the cost to make it a more accessible device and theoretically at least, have a greater number of people buying games through their ecosystem.
In November last year, Larian publishing director Michael Douse, who is in charge of business development regarding the likes of Steam megahit Baldur’s Gate 3, took to social media to suggest Valve would lose “far more” than the approximate $200 difference by not having more users on the Steam storefront, “which is essentially a money printing machine.”
“That said it isn't stupid to not sell things at a loss, just peculiar in this case,” Douse continued.
Valve has suggested to IGN that it originally planned to sell Steam Machine for around $749, but ended up raising the price by about 33% amid the rising cost and scarcity of components. The company hasn’t absorbed that increase, and in a post on its website, it explained why.
“We think of Steam Machine as an extension of PC gaming, not as a console,” Valve explained. “The traditional console model is to sell hardware at a loss and make up the revenue with subscription services or by selling games that are locked-in to the hardware. We think this can make sense for a single business in the short term but that open ecosystems are better for customers over the long term. PC gaming's history proves this: The openness of the PC gaming space has enabled it to be the primary driver of hardware and software innovation for decades.
“The strength of PC gaming is the ability to play the games you want on the hardware you want. Steam Machine is *a* solution to these problems (and we think it's a great one), but it's not the only solution, and we don't want it to be.”
Valve’s statement here is in stark contrast to the policy of the console manufacturers such as Microsoft and Sony, who have traditionally absorbed a loss on the sale of each console knowing profit will be made further down the line with software and services revenue. But gamers are bracing themselves for astronomical next-gen console prices, too.
Earlier this month, new Xbox boss Asha Sharma said the spiralling cost of new and existing consoles would require "radically different business models" over the coming generation. Speaking to Fortune, Sharma acknowledged the increasing price of existing hardware and components — fuelled by global crises and the rise of AI — and said the industry had "reached a point where it will be hard to imagine" mass audiences still being able to afford "thousands of dollars" for a new console generation.
For the first time, the current PlayStation 5 and Xbox Series X/S generation of consoles have seen price increases rather than cost savings over the course of the past five years. Nintendo is not immune to this either, and recently acknowledged it would up the price of Switch 2, just over a year after its arrival.
Steam Machine launches in four different options, and you can sign up now for a chance to reserve them:
Both the Steam Machine 2TB and 2TB bundle options come with two additional faceplates: red fabric, and solid walnut.
Wesley is Director, News at IGN. Find him on Twitter at @wyp100. You can reach Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.
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