CES: Valve's Steam Box Brings Serious Competition to Console Gaming

After months of rumor and speculation, Gabe Newell, founder and CEO of Valve, has gone on the record to confirm development of the company's "Steam Box" console, a move that could provide serious competition for the big three game console makers.

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Valve's Steam service dominates the PC gaming space, offering PC game publishers a secure, turnkey solution for publishing their games, and gamers a central hub from which to buy thousands of games, many at prices far below the standard $50 to $60 paid for boxed games on Xbox 360, Playstation 3 and Wii. With an estimated 50 million users, Valve's entry into the living room gaming market has the potential to be an extremely disruptive force in the gaming, with implications for the general entertainment market as well.

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In an interview with The Verge, Newell confirmed that they are not only making their own hardware, but also inviting third parties to make their own version of the Linux-based system.

One company at CES, Xi3 has announced that they will make a Steam-oriented system called Piston. Valve's device, code-named Bigfoot, will also be able to act as a home server, pushing media out across the house, including support for up to eight players on eight separate screens. It will also enable room-to-room content-shifting for games, music and video content.

Newell dropped hints about controllers for the system that are more precise than those on current systems, which might include other features as well. "I think you'll see controllers coming from us that use a lot of biometric data... we also think gaze tracking is going to be super important."

Recently, Valve released "Big Picture Mode" as a beta program. Big Picture Mode is an overlay interface for the Steam service, designed to be used on living room-style setups, which allows users to navigate entirely with a game controller.

The company introduced cloud storage for its users recently. A long-time booster of open-source software (Newell has been a vocal critic of Windows 8), Valve also released a Steam client for Linux, which is expected to power the Steam Box.

Valve has also ventured into selling movies, music and ebooks in the last year, so a move from the den and into the home entertainment space could presage an expansion of that marketplace for them as well. With a gigantic user-base, and a long track record of well-placed ambition, Valve's move into the living room promises to be once to watch.