I wish I hadn’t made my post on the future of the living room so huge, burying Valve on page 4. I suddenly have the desire to update the picture with a companion cube submarine emerging from the depths between the Apple and Google ships. Here’s why we should all take Valve seriously: They are insanely efficient at leveraging their small size.
Valve has the sharpest outlook on how a software/services platform should be run in the game industry. Despite being a small company at around 300 employees, Steam is dominant on the PC. Michael Abrash’s recent post illuminates how Valve is optimized around delivering maximum value per employee. Valve’s 300 is more directly effective than, say 300 of the people working on the next Xbox (efficiency #1).
They also fly the flag of open platforms and direct access to customers. They believe (as I do) that connecting developers to customers as seamlessly as possible will create the best experiences and ultimately the best platform. Oppressive certification is a waste and a platform hindrance. TF2 is a massively better business on Steam than it ever was on the 360. That direct connection creates an efficient platform, which requires less scale on Valve’s part (efficiency #2).
An open platform device doesn’t have to be as complex and monolithic as an Xbox or an iPad. The graphics hardware race is largely irrelevant on anything that’s not mobile these days. Valve is capable of taking PC components, putting them in a box, and using Steam as an OS* (efficiency #3).
An open platform device doesn’t need a huge launch with a massive marketing push. Forget retail. Valve is big on market experiments and I can see them putting out a Steam box in a bare-bones version 1.0. From there they will learn, iterate and scale up (if the market supports it). It’s an antithetical strategy for a hardware platform launch, but it’s gospel for a software platform launch (efficiency #4).
The thing about the next generation is, it’s going to be much more about software and services than hardware. Valve is in a great position to disrupt the big players purely by virtue of their dedication to open platforms. Not to mention, they understand the importance of a good controller to the living room experience, something I’m not sure even Apple gets, what with their undying devotion to the all-powerful touchscreen.
I once made the mistake of expecting Steam to take over and disrupt the PC market overnight. I was right in my predictions but utterly wrong on the time scale. If anyone can do this, it’s Valve. Just understand, it’s going to happen on Valve Time.
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* Most games currently on Steam use DirectX, which is part of Windows. Valve (including Gabe himself) are working on a Linux port of Steam – Why? There is probably a solution to the DirectX issue either by either launching their Steam Box without the DirectX titles, or by using a networked Windows PC (already running Steam) to render those games over the network back to the Steam Box.