Technology

Our last, best hope for the subsidy model was Valve, a company that famously rakes in money hand over fist and launched the original Steam Deck at the unbeatable price of $399 through a “painful” amount of subsidy. If Valve did the same for the upcoming Steam Machine, it could have legitimately competed with the PlayStation and Xbox for your living room TV.

But Valve has all but dashed those hopes through a series of moves. In late December, it discontinued the $399 Steam Deck, raising the starting price to $549. In early February, it announced that the Steam Machine had been delayed due to the memory shortage and that the company would have to reset expectations on pricing. And now, even the $549 Steam Deck OLED is out of stock specifically because of the memory crisis.

I was pretty confident that Valve was not going to subsidize the Steam Machine from the start, even before Valve said that it would be priced comparably to a PC and even before it said that it was delaying determining pricing (which was a good sign that it hadn't locked in a contract price on components). I commented along those lines here.

Consoles can do the razor-and-blades model because they are a closed platform. If you buy a Playstation, it doesn't do you much good unless you use it to buy Playstation games. So each Playstation purchase is very, very probably going to be used to purchase Playstation games. Sony can crank up prices on those and make their initial loss back.

But the Steam Machine is open. I can go run whatever on it. I can just take the thing and, say, make it a media server or whatever. And if Valve subsidizes it, people will just buy it instead of a comparable PC and then run whatever they want on it. Doesn't make much sense for Valve, just because of the nature of the machine.