Valve have made a profound impact on the PC gaming market since they launched Steam. They have roughly half the PC digital game distribution market, they offer more games for under £4 than my local branch of GAME offers at any price, and they have up to 4 million users online at peak times. But while most still think of them as primarily a game distribution system, bits of news have trickled out of the last year which suggest that they are looking beyond that.

First up was the ‘Steam Box‘, a hypothetical console designed by Valve, to compete with Apple TV and the gaming consoles. Valve were quick to deny this at the time, however.

Now note the recent statement from Valve’s Gabe Newell that “Windows 8 is a catastrophe for everyone in the PC space”, and more significantly the part where he goes on to say, “I think we’ll lose some of the top-tier PC/OEMs, who will exit the market. I think margins will be destroyed for a bunch of people. If that’s true, then it will be good to have alternatives to hedge against that eventuality.” (Emphasis mine.) This is why Valve are taking a keen interest in Linux, porting Left 4 Dead 2 to Ubuntu (with significant success, it seems).

But there’s more: Valve recently talked about branching out into non-game software, which goes beyond merely protecting their game sales from the risks of a Windows 8 walled garden. Obviously they already have the means of distribution and bricks-and-mortar retail is suffering so this makes sense. But I think there’s more to it than this.

I suspect that Valve will do some variation on the following:

• Use their knowledge learned during the port of L4D2 to get their Source engine running all their back catalogue on Linux. Gaming on Linux has been mostly held back by a chicken-and-egg problem: because there’s no retail market for Linux games, publishers won’t spend money on Linux ports of Windows games, meaning there are few games available on the platform, which inhibits adoption of the platform by gamers. Since Valve is the combined developer, publisher, and distributor of these games, they can jump start this process with a stable of highly-regarded games.
• Take the abstraction layers they develop during the port to create a framework or library to aid porting from Windows to Linux (and possibly MacOS). This will probably be offered free to developers to facilitate them offering their games across multiple platforms. This will let them quickly fill the Linux Steam store with games without needing to do much work themselves. The success of the Humble Indie Bundles in recent years show that there are people who will buy games for Linux, and that the numbers are not too dissimilar from MacOS users (but with almost 20% higher revenue per user), so I don’t think it’s a coincidence that Valve have integrated the bundles with Steam.
• Intensify work on the Steam Box, with the idea being to produce an Ubuntu-powered system where Steam is the primary software delivery method. By this time they should have many games that exist in a Linux compatible form. The open nature of Ubuntu and Linux’s focus on the typical Intel architecture means manufacturing such a device would be cheap and easy compared to current or next-generation consoles with custom operating systems and architectures.
• Aim to position themselves as clear leaders in the home entertainment market by having the Steam Box be the primary open platform for games and other non-business apps. They will be able to offer a much wider set of game titles than the competition, a better social network, support for mods, etc. And the recent expansion into software other than games will help position it as a useful all-rounder device. Sticking to modular PC-style hardware and open development standards like OpenGL will also allow them to ship significantly upgraded versions of the Box every few years in a way that consoles with their proprietary APIs cannot, while benefiting from free updates coming from the Ubuntu ecosystem.

If done properly, it could certainly shake up the gaming industry over the next few years, disrupting things much like Google did with Android, possibly following a similar model of allowing multiple hardware manufacturers. There’s nothing amazingly revolutionary here, but when you’ve already tied up the software side you just need decent hardware to close the loop. It may sound a bit far-fetched to consider a Valve console, but some of us will remember a time when the idea of Microsoft launching one seemed crazy too. Valve look like being in a similar position now.