Valve Gaming Console Targets Sony PlayStation, Microsoft Xbox

Digital download console by 'Counter-Strike' creators could revamp gaming industry.

Steam OS would make its video game downloading platform independent of Microsoft Windows or Apple iOS.

Gaming company Valve plans to create a video game console and operating system focused on its Steam digital download software, which could accelerate the move of PC-style gaming into the living room and pressure the video game industry to focus more on digital download convenience.

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Software company Valve plans to make available a series of products in 2014, including the Steam OS, which would make its Steam downloading platform independent of Microsoft Windows or Apple iOS. The company is also planning a "Steam Machines" that could run the new operating system on a TV. Details on the game console are vague and likely evolving before it becomes available in 2014, but the company unveiled a new Steam Controller as the first part of a new gaming system. The company announced each of the three products on separate days recently, beginning with the first announcement revealing Steam OS on Sept. 23.

"SteamOS combines the rock-solid architecture of Linux with a gaming experience built for the big screen," Valve said in its announcement.

Valve capitalized on its popularity for games including "Half-Life" and "Counter-Strike" by designing the Steam online platform to redistribute and sell discounted downloads of video games on a PC. Designing its own console and operating system may give the company a platform to sell its own video games, but also the ability to offer its own suite of services and compete with Apple, Google and Microsoft, says Brian Blau, who analyzes the video game industry for technology research firm Gartner. The new Steam products will come out of the gate swinging by drawing on the company's existing fan base of gamers, Blau says.

"Valve came out with Steam since they felt the gaming market was being underserved, and gamers love them for it," Blau says.

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The new controller indicates the console will be designed to merge PCs and video game systems. The new controller has two circular track pads designed to offer the precise aiming that a mouse allows on PC games.

"Gamers really haven't had any controller like this before," Blau says. "I suspect Valve has done lots of testing. They have been in the game business and know gamers well, so expect that their new controller will do well within their PC-centric customer base."

This announcement indicates that Valve will likely build a simple console that will be inexpensive for them to build and distribute. Valve is likely aiming to expand revenue through digital downloads on Steam, so the new console would not need to be expensive, says Scott Steinberg, a consultant on the gaming industry at business consulting firm TechSavvy.

"If you don't have to keep a Blu-ray disc drive on a system you get a lot of space," Steinberg says, expecting the system will have a simple design focused on digital downloads.

The video game industry is experiencing a shift toward digital products as mobile devices draw traffic away from PCs and consoles, so the Steam Machines could be "an evolutionary upgrade," and would place pressure on Microsoft and Sony to adapt if they are successful, Steinberg says.

"The launch for the new Xbox and PlayStation are going to be very closely scrutinized to see how relevant consoles are in a world of increased connectivity," Steinberg says. "Valve may not meet with success at first, but it knows how to upset the status quo and make a dent in the marketplace. Valve also has good relationships with top game developers and is able to offer downloads of games at a discount on Steam."

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Valve is trying to accelerate an evolution of gaming systems that slowly phase out the need for disc drives. Xbox 360 offers Microsoft's Windows store to allow digital downloads of games and other download service options including Netflix, evolving the system away from the pure disc game focus of the original Xbox.

Valve has a loyal fan base but tens of millions of gamers have purchased PlayStation and Xbox systems. Sony has sold approximately 79,530,000 PlayStation 3 units since launching that system in 2006, according to VGChartz. Microsoft has sold approximately 78,620,000 Xbox 360 units since launching that system in 2005.