Valve's Steam Machines Join Game Console War

These are perilous times in the console video game business. The industry’s revenue fell 32 percent, to $13.3 billion, from 2008 to 2012 and is forecast to decline again this year, according to market researcher NPD. In August, Nintendo cut the price of its year-old Wii U system, having sold less than 5 percent of the 9 million consoles it aims to sell by next April. With the popularity of cheaper, more portable games for smartphones and tablets, it’s Sony and Microsoft’s turn to prove there’s still a place for consoles as they ready the PlayStation 4 and Xbox One for Black Friday shoppers.

So why is game developer Valve, known for its sci-fi thriller franchise Half-Life, preparing to launch a range of expensive consoles in this ultracompetitive market? The Steam Machines, tentatively slated for release in early 2014, will vary in price from $500 to $900, according to Wedbush Securities analyst Michael Pachter, and will run on Valve’s new Linux-based SteamOS operating system. The aim is to leverage the success of its online site (also called Steam), which has attracted about 65 million users to buy and download games designed for PCs and laptops.