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BELLEVUE, Wash. — I took a short trip to Valve’s headquarters this week to view the company’s latest prototypes for Steam Machines, the Valve-powered Steam OS gaming computers with a special controller for big-screen TV play. At its high-rise building in downtown Bellevue, company engineers showed me demos of near-final controllers and a variety of machines that are expected to ship in November.

As envisioned, the Steam Machines are living room gaming computers aimed at preserving the openness and innovation of the PC, and they represent a potential threat to Microsoft’s decades-long grip on the $25 billion Windows PC gaming market as well as the equally large console game market. This ambitious plan makes Valve one of the most interesting companies in the gaming industry, as it takes on roles as both a game maker and a technology provider.

But Valve itself has stayed small at 380 employees. Much like its strategy with SteamVR virtual reality system, Valve is licensing its Steam Machine technology to hardware makers who will launched their own machines. Valve itself will make just two of the system’s devices, the System Link streaming device and Steam Controllers.


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Eric Johnson and Scott Dalton (right) at Valve with a Steam Machine controller.

Above: Eric Johnson and Scott Dalton [right] at Valve with a Steam Machine controller.

Image Credit: Dean Takahashi
In a bid to give its customers a chance to play their Steam games on a TV — which have bigger screens than most PCs do — Valve came up with its plan to enable Steam games to run in the living room. It invented software such as its Steam Big Picture user interface for TVs, and it created the Linux-based Steam OS to run the games instead of Microsoft’s Windows. Even so, many Steam Machines are expected to be PCs that have the capability to dual boot to either Windows or the Steam OS.

Overall, Steam Machines seem like an outlandish plan. And some of Valve’s high-profile Steam Machine and SteamVR experts have moved over to work at their rival, Facebook’s Oculus VR division.

But being outlandish is nothing new for Valve. Founded by former Microsoft employees Gabe Newell and Mike Harrington, the company started out in 1996 as a game developer, and its first game, Half-Life, was a huge hit when it debuted in 1998. It produced hit after hit, and along the way, it created the Steam digital distribution service on the PC. Now Steam has turned Valve into a digital distribution giant — it’s the top store for downloading games, by far.

Rather than make its own console, Valve created a basic architecture for Steam Machines: the Linux-based Steam OS. It also crafted its own Steam Controller for controlling PC games in the living room, and it uses either a Steam-based computer or System Link streaming engine to display games on a big-screen TV in the living room.

A lot of people may have written off the whole effort, since it was announced so long ago. But Valve is moving forward with production of Steam Controllers momentarily. At Valve’s headquarters, Erik Johnson and Scott Dalton of Valve showed me the latest Steam Machines and the redesigned Steam Controller.

“Preorders are going to begin really soon, and about a dozen machines will be ready for November launch,” said Valve marketing head Doug Lombardi in an interview with GamesBeat.

Redesigning after the delay

Valve's Gabe Newell announcing Steam Machines at CES in 2014.

Above: Valve’s Gabe Newell announced Steam Machines at the International CES in 2014.

Image Credit: Dean Takahashi

Valve has been working on pieces of the Steam Machine for a long time. It built the Steam digital distribution service, debuting the service on the Windows PC in 2003. It extended that to the Mac in 2010, mobile devices in 2012, and Linux in 2013. In 2012, it also created the Steam Big Picture mode, which allows you to view the Steam use interface from 10 feet away, so it can be displayed on high-definition TVs. Valve was also working on a virtual reality system, SteamVR, in parallel.

When Microsoft started talking about Windows 8, it hinted that it would go the route of Apple, allowing only one store for digital distribution. It didn’t actually do that, but it spooked Valve’s boss, Newell. It started working on an alternative system based on Linux. But it also had to figure out a way for PC gamers, who were used to a mouse and keyboard, to play their games on the TV with a console-like controller. Some games, such as real-time strategy games, just aren’t built for controllers. With the trackpads, Valve offered a solution with the Steam Controller.

In January 2014, Newell unveiled the Steam Machines project at the International CES in Las Vegas. At the time, 13 hardware partners said they would ship Steam Machines. But in May 2014, Valve announced it was delaying the release until 2015 because of feedback the company received about the wireless controller.

Johnson told me that the company went back to redesign the controller. It added the left-side analog stick, which console gamers are used to, in addition to the dual trackpads. The controller has HD haptic feedback, dual-stage triggers, back grip buttons, and fully customizable control schemes.

“The controller was a lot of the reason for the delay. We often take the position of taking more time. Given we already knew of problems that customers would run into, and given that we don’t have some goofy external pressure around shipping, let’s just fix problems we know customers are going to run into,” Johnson said. “There isn’t a super interesting story other than it is just work.”

Valve fixed the controller, adjusting the position of the buttons, adding the analog stick for more precise and familiar control, and slicing off the bottom of the controller to enable a better fit for people with smaller hands.

The controller connects wirelessly using Valve’s own custom wireless technology, which is designed for high-speed connectivity with low latency.

Hands-on demo

Valve Steam Machine powered by Falcon Northwest PC

Above: Valve Steam Machine powered by a Falcon Northwest Tiki PC on the right

Image Credit: Dean Takahashi

At Valve’s HQ, I walked into a room with three huge TVs, all connected side-by-side. A different kind of Steam Machine was running with each one.

In the middle was Dell’s Alienware machine. This box sells currently for $480 with Windows. But that kind of machine represents the low end of the market, and plenty of others will fill out the rest of the hardware options. Dell hasn’t made any announcement, but I would guess that it’s going to refresh the system with new components for the November release.

The team showed me The Talos Principle, a third-person puzzle game designed for the Windows PC, running on a Steam Machine with the Steam Controller. Dalton then showed the system playing Counter Strike: Global Offensive at 120 frames per second at a resolution of 1080p.

“This is a heavily user-generated content game with mods that you can get only on the PC,” Johnson said, regarding Counter Strike: Global Offensive. “This is one of those games that makes the PC a great system.”

The Falcon Northwest Tiki machine ranges from $1,200 to $4,900. Johnson showed me a demo of the new Unreal Tournament from Epic Games running on a 4K television. Kelt Reeves, the head of Falcon Northwest, told me that he expects to be able to quickly convert a shipping Windows computer into a Steam Machine upon receiving a short amount of notice from Valve about the release date. He thinks such a Tiki system will be able to dual-boot Steam OS or Windows.

The third TV in the room was intriguing, as it showed off the Steam Link.

You can run the Steam games on a television by connecting the Steam Machine directly to a TV. Or you can also play the games by connecting your existing computer to a Valve Steam Link box, which connects your TV and your home network, allowing you to stream Steam games from the PC, even if the PC is in another room such as your office. The controller will work with a Windows machine, too.

“They’re just PCs, and the PC makers are going to do what they do,” Johnson said. “They’re going to attack challenges like form factors, commodity pricing on hardware, and reach out to different segments of the audience, from mainstream to super high end. They will do what they are good at, building the right box for everybody.”

Valve Steam Machines, powered by System Link and Dell.

Above: Valve Steam Machines, powered by System Link and Dell.

Image Credit: Dean Takahashi

Dalton described the latest design for the controller and put one in my hands. I felt the little notches in the track pad.

Counter Strike: Global Offensive ran at full resolution on a 1080p screen at 60 frames per second. Then they showed me Middle-earth: Shadow of Mordor, an action game, running on a 4K TV on a Falcon Northwest Tiki machine with an Nvidia GeForce GTX 980 system. Finally, they demonstrated the Tiki running a 4K version of the upcoming Unreal Tournament arena shooter coming from Epic Games. The images on the TV will look great if you have a powerful computer that you’re streaming the images form.

The controller felt good in my hands. It fit snugly. The concentric circles on the trackpad helped me be more precise in moving my view and my weapon. You can swipe across the trackpad and feel the trackball rolling in a measured way under your thumb. Johnson said mouse-centric games such as Civilization V, Kingdom Rush, and Pillars of Eternity work well with the Steam Controller.

“The controller works surprisingly well with mouse-based games,” Johnson said. “With DOTA 2, it’s a challenge. It will take some work on the game side.”

I suspect that you won’t be able to get as many kills with the Steam Controller as you can with a mouse and keyboard on a shoot game on the PC in the den. But Johnson said it’s a fair test to compare how many kills you would get compared to an experience with a controller like the one for the Xbox One or the PlayStation 4.

“With a first-person shooter, our approach works really great,” Johnson said.

The Steam Link lets you stream content inside your home from a PC in the office to the living room. You can attach the $50 System Link across a wired home network and play from the Steam library. More than 1,000 Steam games are currently playable, including a 1999 version of System Shock 2 that wasn’t designed to be played with a controller.

“We had to do a bunch of low-level code writing on this to get the streaming to work,” Johnson said. “We have done a lot of work with the link and the controller to make sure that as much of our customers’ content can be played in the living room.”

Shipping details

Valve 4K Steam Machine powered by Falcon Northwest

Above: Valve 4K Steam Machine powered by Falcon Northwest

Image Credit: Dean Takahashi

Valve expects the machines to launch this fall, and November looks like the month it will happen. Partners will determine the final ship dates, but Valve will manufacture the Steam Link and the Steam Controller itself.

Dalton said that the controller is almost done and that the initial units are going to be coming off a high-tech robotic manufacturing line in Chicago as soon as next week. If the units that come off the line look good, then the Steam Controller will be on its way to final production.

“We want to make our customers trust us and feel good about it,” Johnson said.

The controller is $50, as is Steam Link. The Steam Machines may very well debut at the same time that HTC launches its SteamVR-based virtual reality goggles and accompany sensor hardware, which will work with a PC.

The hardware makers will supply the necessary variety for the market. Roughly a dozen Steam Machines are expected to be ready.

“The range is going to be as big as the gaming PC range is today,” Johnson said.


Valve Steam Machine with Steam Controller

Above: Valve Steam Machine with Steam Controller

Image Credit: Valve

Valve disappointed a lot of gamers last year when it made them wait. It is now in the process of winning back their trust. A lot of them have probably already moved on to new Windows machines or game consoles. By the time the Steam Machines ship in the fall, they’ll have competition from Windows 10 machines as well as new consoles such as the Nvidia Android-based Shield set-top box. It’s going to be a crowded market.

Valve’s advantage is that Steam has hundreds of millions of users who have invested a lot of money in their Steam libraries. By giving them the capability to play those games and new ones in the living room, Valve may find a waiting audience. About 5,000 games are available on Steam, and more than 1,000 can run on the Steam Machines. The more of those Valve moves over, the larger its opportunity will be.

Valve has a reputation of thinking of gamers first. It occasionally screws up, as it did when it had to retract its position on paid mods for PC games for the Steam digital store. But it has also earned a lot of trust over the years. If rivals like Microsoft do anything that appears to be anti-consumer, they could give Valve a golden chance to shift players to Steam Machines.

“We’re pretty allergic to making up rules for what customers can and can’t do with their PCs,” Johnson said.

Steam Link

Above: Steam Link

Image Credit: Valve

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