So I read this article and a lot of people are saying it’s likely to be priced out of competitiveness in the console space due to the parts shortages.
I understand why they couldn’t sell it at a loss. It’s a general purpose computing device, and it would be too easy for a call centre somewhere to buy 100 of them, which would lead to 0 game sales for Valve…
But why couldn’t they release it at the stupid $900 price point, but then offer a $100 - $200 Steam voucher along with it? It sidesteps the call centre issue because the hardware is still full price, but they recoup (some) of their costs for those that ACTUALLY want is as a games console
I understand why they couldn’t sell it at a loss. It’s a general purpose computing device, and it would be too easy for a call centre somewhere to buy 100 of them, which would lead to 0 game sales for Valve…
I’m not saying they will, but I hear people repeat this as if it’s fact, and it’s pretty nieve. They’ve had other products people wanted to scalp, or whatever, before. They have a system for it. You have to have a Steam account older than a set date before you can purchase, and your number of purchases is limited.
That’s even assuming it makes sense. Yeah, the price could be low for the hardware compared to average consumer products, but does that mean it’s lower than the, comperatively, cheap hardware used by offices? Almost certainly not. They probably don’t even have a GPU. They have to compete with gaming hardware prices, not office computers. A low gaming hardware price is still going to be expensive for an office. It’s also going to be expensive for the product for a data center. They have specialty hardware they use that’s purpose-built for the task. Sure, once upon a time the PS was used for a supercomputer. That was a much different time for hardware.
Little late reply here… It just occured to me, that there could be a solution to this voucher selling problem. If you purchase the Steam Machine on the Steam page with your Steam account, then you could get the money onto your account. So selling it wouldn’t be possible. However, they could buy and sell items from the Steam item shop…
The problem with that solution, from Valve’s perspective, is both the cost of providing the voucher (they would have to pay developers at least 70% of the voucher value) and the risk that an end-consumer that doesn’t intend to use Steam simply converts it to money by selling Steam gifts, replacing a sale they would have otherwise had while not generating additional sales from the Steam Machine user.
The ideal means of doing it to diminish that risk would be to make the voucher not usable for gifts, though Valve would still need to price the system to account for the cost of providing the voucher.
But that is still preferable over no vouchers. The point is, that the machine gets more expensive because of the vouchers, so that Valve does not pay from their own pocket. This way the system gets more expensive for those who don’t want to use it for gaming and have less incentive of buying it. And for the gamer, they would buy games anyway, so its not a big deal.
The only problem with that is, that the system gets more expensive and that is bad.
And? The problem is steam not being able to sell the console at a loss. The hypothetical call centre is welcome to sell the vouchers. They’ve still paid full price for the machine. This makes it a much more enticing prospect for people that actually want to game on it though, and so long as the bundled voucher eventually gets used, why would it matter that it’s not the person that bought the hardware?
ETA: Also, if the voucher doesn’t get used at all, Valve win entirely
The hypothetical call center would be selling Steam Accounts, with… $100 in their Steam Wallets, or w/e.
Which is … well, against Steam policy, though enforcement is spotty.
Or I guess… physical Steam Gift cards?
But that leads into the other part of this:
The call center would have to be making basically fake individual Steam Accounts for each purchased Steam Machine.
And then probably routing them to different addresses. Different home addresses.
Valve sells its hardware directly through Steam.
They ship it to you.
No stores.
Sure, secondary markets always exist, but it is at least kind of hard to like, buy 100 Steam Machines or 100 Steam Decks on one legit Steam Account, they can easily just say uh no, you get a max of 5 or 2 or whatever.
So yeah a call center could pull off buying a bunch of them, in the sense of them being a scam call center that specializes in fraud and identity theft, yeah, they’d be able to figure it out, but it would probably be decently illegal.
Because Valve would have to pay out 70% the value of the vouchers to developers in game redemptions; the break even point would therefore need to account for that amount being subtracted first (i.e. for $900 including a $200 voucher, $760).
At that point, Valve would likely have higher sales if they didn’t include the voucher and reduced the price by the 70% in voucher value it would have cost them otherwise.
This is about competing in the console space though, where eating some of the cost of the hardware is a common practice on the gamble that the more consoles you sell, the more you make in game sales.
The problem for Valve is that they’re selling something that could be used as a general computing device which means that there’s no guarantee that they’d recoup the cost in game sales.
This is a sort of middle ground. I understand what I think you’re saying, that if someone buys the console, and sells the voucher, Valve only stand to recoup $60 with no further game sales…
But on the flip side, that’s a lot of extra bs for a call centre IT department to have go through to list and sell a hundred plus vouchers, if they even manage to sell them. It could happen, but it’s far less appealing than a nice cheap workstation for $700. Any they can’t sell before the vouchers expire is a machine they’ve paid full price for. It makes it a much riskier and more burdensome prospect.
On the consumer side, someone weighing up a $500 playstation and a $900 steam machine is more likely to seriously consider the steam machine if they get $200 of that back in games
Beyond initial development costs, it didn’t cost Valve anything to ship the Index with Alyx though. Bundling in a $200 voucher would be increasing the system price by $160 in direct cost to Valve for no reason, as consumers are likely to spend that after purchasing the system, but might be dissuaded by a high initial purchase price.
A more apt comparison in that scenario would be Valve bundling their entire software library with the Steam Machine, or developing a new game to bundle with it as a means of adding value.
A $900 price tag would make it cheaper than a ps5 pro after 2 years due to needing ps+. It’s likely very attractive vs a next gen console with tiny library as well.
And is an actual PC that can be used for more than gaming. That steam voucher proposal is actually a great idea that would make the price easier to stomach.
PS3 having free multiplayer was why I chose it over the Xbox back in the day. Loved the exclusives and playing online for free. Then subscription happened on the Switch and PS4, so I ended up jailbreaking since there was no more benefit to not jailbreaking as someone who refused to pay for multiplayer.
So I read this article and a lot of people are saying it’s likely to be priced out of competitiveness in the console space due to the parts shortages.
Meh. The parts shortages that everyone is experiencing?
I think this is more a case of what do you consider “competition”? Rivian doesn’t compete with Ford - and Valve doesn’t compete with Microsoft/Sony who outsell Valve 20 to 1.
Perhaps the new Xbox is a signal that Microsoft is scared of Valve and Valve is on to something, but I dont think the Steam Machine needs to be competitive in price to the Xbox to be a success.
“Project Helix will lead in performance and play your Xbox and PC games. Looking forward to chatting about this more with partners and studios at my first GDC next week!”
That’s exactly what the article is suggesting they’re doing though, and it certainly makes more sense to compete in that space than in the PC gaming market.
Not to mention there’s speculation that this is why Sony are pulling out of the PC market. Because Steam Machine is aimed at living rooms, which is their domain. Obviously, no idea if there’s any truth to that, but it’s an interesting thought
But why couldn’t they release it at the stupid $900 price point, but then offer a $100 - $200 Steam voucher along with it?
I didn’t think about this; actually a good idea to “force” people into buying Steam and getting into the eco system. Really good point.
Edit: I just read another reply with a really good point. They could just sell the vouchers, even with a slight discount. So a really good point is beaten by another really good point. :D
So I read this article and a lot of people are saying it’s likely to be priced out of competitiveness in the console space due to the parts shortages.
I understand why they couldn’t sell it at a loss. It’s a general purpose computing device, and it would be too easy for a call centre somewhere to buy 100 of them, which would lead to 0 game sales for Valve…
But why couldn’t they release it at the stupid $900 price point, but then offer a $100 - $200 Steam voucher along with it? It sidesteps the call centre issue because the hardware is still full price, but they recoup (some) of their costs for those that ACTUALLY want is as a games console
I’m not saying they will, but I hear people repeat this as if it’s fact, and it’s pretty nieve. They’ve had other products people wanted to scalp, or whatever, before. They have a system for it. You have to have a Steam account older than a set date before you can purchase, and your number of purchases is limited.
That’s even assuming it makes sense. Yeah, the price could be low for the hardware compared to average consumer products, but does that mean it’s lower than the, comperatively, cheap hardware used by offices? Almost certainly not. They probably don’t even have a GPU. They have to compete with gaming hardware prices, not office computers. A low gaming hardware price is still going to be expensive for an office. It’s also going to be expensive for the product for a data center. They have specialty hardware they use that’s purpose-built for the task. Sure, once upon a time the PS was used for a supercomputer. That was a much different time for hardware.
Then the same thing would occur—buyers not interested in using Steam would sell the vouchers or the accounts those vouchers are tied to.
Little late reply here… It just occured to me, that there could be a solution to this voucher selling problem. If you purchase the Steam Machine on the Steam page with your Steam account, then you could get the money onto your account. So selling it wouldn’t be possible. However, they could buy and sell items from the Steam item shop…
The problem with that solution, from Valve’s perspective, is both the cost of providing the voucher (they would have to pay developers at least 70% of the voucher value) and the risk that an end-consumer that doesn’t intend to use Steam simply converts it to money by selling Steam gifts, replacing a sale they would have otherwise had while not generating additional sales from the Steam Machine user.
The ideal means of doing it to diminish that risk would be to make the voucher not usable for gifts, though Valve would still need to price the system to account for the cost of providing the voucher.
But that is still preferable over no vouchers. The point is, that the machine gets more expensive because of the vouchers, so that Valve does not pay from their own pocket. This way the system gets more expensive for those who don’t want to use it for gaming and have less incentive of buying it. And for the gamer, they would buy games anyway, so its not a big deal.
The only problem with that is, that the system gets more expensive and that is bad.
And? The problem is steam not being able to sell the console at a loss. The hypothetical call centre is welcome to sell the vouchers. They’ve still paid full price for the machine. This makes it a much more enticing prospect for people that actually want to game on it though, and so long as the bundled voucher eventually gets used, why would it matter that it’s not the person that bought the hardware?
ETA: Also, if the voucher doesn’t get used at all, Valve win entirely
The hypothetical call center would be selling Steam Accounts, with… $100 in their Steam Wallets, or w/e.
Which is … well, against Steam policy, though enforcement is spotty.
Or I guess… physical Steam Gift cards?
But that leads into the other part of this:
The call center would have to be making basically fake individual Steam Accounts for each purchased Steam Machine.
And then probably routing them to different addresses. Different home addresses.
Valve sells its hardware directly through Steam.
They ship it to you.
No stores.
Sure, secondary markets always exist, but it is at least kind of hard to like, buy 100 Steam Machines or 100 Steam Decks on one legit Steam Account, they can easily just say uh no, you get a max of 5 or 2 or whatever.
So yeah a call center could pull off buying a bunch of them, in the sense of them being a scam call center that specializes in fraud and identity theft, yeah, they’d be able to figure it out, but it would probably be decently illegal.
Because Valve would have to pay out 70% the value of the vouchers to developers in game redemptions; the break even point would therefore need to account for that amount being subtracted first (i.e. for $900 including a $200 voucher, $760).
At that point, Valve would likely have higher sales if they didn’t include the voucher and reduced the price by the 70% in voucher value it would have cost them otherwise.
Yes, they would.
This is about competing in the console space though, where eating some of the cost of the hardware is a common practice on the gamble that the more consoles you sell, the more you make in game sales.
The problem for Valve is that they’re selling something that could be used as a general computing device which means that there’s no guarantee that they’d recoup the cost in game sales.
This is a sort of middle ground. I understand what I think you’re saying, that if someone buys the console, and sells the voucher, Valve only stand to recoup $60 with no further game sales…
But on the flip side, that’s a lot of extra bs for a call centre IT department to have go through to list and sell a hundred plus vouchers, if they even manage to sell them. It could happen, but it’s far less appealing than a nice cheap workstation for $700. Any they can’t sell before the vouchers expire is a machine they’ve paid full price for. It makes it a much riskier and more burdensome prospect.
On the consumer side, someone weighing up a $500 playstation and a $900 steam machine is more likely to seriously consider the steam machine if they get $200 of that back in games
The Index came with a free copy of Alyx
Beyond initial development costs, it didn’t cost Valve anything to ship the Index with Alyx though. Bundling in a $200 voucher would be increasing the system price by $160 in direct cost to Valve for no reason, as consumers are likely to spend that after purchasing the system, but might be dissuaded by a high initial purchase price.
A more apt comparison in that scenario would be Valve bundling their entire software library with the Steam Machine, or developing a new game to bundle with it as a means of adding value.
A $900 price tag would make it cheaper than a ps5 pro after 2 years due to needing ps+. It’s likely very attractive vs a next gen console with tiny library as well.
Plus it will be able to play any game I already own on steam on day one!
And is an actual PC that can be used for more than gaming. That steam voucher proposal is actually a great idea that would make the price easier to stomach.
I don’t think people buying consoles are doing that kind of long term thinking
Free multiplayer is a pretty good selling point either way.
PS3 having free multiplayer was why I chose it over the Xbox back in the day. Loved the exclusives and playing online for free. Then subscription happened on the Switch and PS4, so I ended up jailbreaking since there was no more benefit to not jailbreaking as someone who refused to pay for multiplayer.
Meh. The parts shortages that everyone is experiencing?
I think this is more a case of what do you consider “competition”? Rivian doesn’t compete with Ford - and Valve doesn’t compete with Microsoft/Sony who outsell Valve 20 to 1.
Perhaps the new Xbox is a signal that Microsoft is scared of Valve and Valve is on to something, but I dont think the Steam Machine needs to be competitive in price to the Xbox to be a success.
That’s exactly what the article is suggesting they’re doing though, and it certainly makes more sense to compete in that space than in the PC gaming market.
Not to mention there’s speculation that this is why Sony are pulling out of the PC market. Because Steam Machine is aimed at living rooms, which is their domain. Obviously, no idea if there’s any truth to that, but it’s an interesting thought
I didn’t think about this; actually a good idea to “force” people into buying Steam and getting into the eco system. Really good point.Edit: I just read another reply with a really good point. They could just sell the vouchers, even with a slight discount. So a really good point is beaten by another really good point. :D