TL;DR: Provide a summarized representation of system requirements, make it easier to decide between different models, partner with YouTube and/or NetFlix to make the device more valuable, spin the cost of a Steam Machine as an investment in cheaper per-game costs and long-term compatibility, and appoint/hire a hype management expert.
With Steam Machines, Valve is quite possibly the first company to have a viable idea for a non-traditional gaming console. However, there are still several ways in which they don’t seem to be learning from history.
One of the greastest strengths consoles have always had (and, with PCs taking the lead on hardware innovation, their main strength) is their appliance-like simplicity. Conversely, the greatest weakness of personal computers is that they do an inherently complex job and attempts to reduce them to mere appliances have always crippled them to the point of irrelevance.
However, as the millennial generation grew up with computers, the definition of an acceptably simple console shifted closer and closer to what Steam now provides, growing a simplified operating system, game browser, online store, and a menu analogous to the Steam overlay.
While I’m not a fan of online DRM, I can’t help but approve of the money and effort Valve has been pouring into getting people to make Linux builds of games (making a build without Steamworks CEG for sites like GOG and Humble is easy once you get that far), so I thought I’d point out the main mistakes Valve seems not to be learning from the tales of other “licensed hardware” consoles, like the 3DO, the Philips CDi, and the Nuon.
First, price. Without the ability to sell the console as a loss-leader or enjoy the massive economies of scale for a single model, these consoles always lose out on price.
Second, confusion. To put it bluntly, “If I wanted to do research, I’d be a PC gamer”. Picking the right Steam Machine is a serious issue and at odds with the “console-like simplicity” niche that everything else about the Steam Machine has been aiming for.
Valve should also keep in mind that a glut of choice without clear and obvious determinants was one of the big contributing factors to the video game crash of 1983. The difference being that, here, the answer is “Stick to Nintendo/Sony/Microsoft” rather than “Shy away from the entire market”.
Third, inertia. Whenever you look at technologies which failed to live up to their potential, one of the recurring themes is that they fell off the wave of excitement they were building and it died away. Steam Machines have suffered the same problem, which makes future marketing efforts much more difficult.
That said, the biggest problem the 3DO, CDi, and Nuon had was their poor game libraries… something Valve has been doing an excellent job to solve. This is why I firmly believe Steam Machines have a chance.
First and foremost, Valve needs to simplify buying decisions. I strongly suggest the following:
- Summarize system requirements into numbered hardware classes and focus promotional efforts on three at a time, representing entry, mid, and high-level hardware:
- Class 1: Entry Level on release day
- Class 2: Mid-level on release day, Entry Level when Class 4 is announced
- Class 3: High-level on release day, Mid-level when Class 4 is announced
- Class 4: High-level when announced
- Set up something like the Windows Logo Program through which hardware partners are approved for “Class 1/2/3” badges to use on their hardware and packaging.
- Use class badges to summarize the required and recommended system requirements on each game in the Steam store and add support for filtering by them.
- By default, Steam Machines should filter by required class. (Completely. Even front-page promotions which don’t run on the filtered class should be eliminated or collapsed into a “deals for your other devices” bar on Steam machines incapable of playing them.)
- Produce a prominent “What Steam Machine Is Right For Me?” comparison matrix based, not on system requirements or features, but on comparing which games will run on which of the three classes currently being promoted. I’d suggest the following three columns with “and more…” hyperlinked to an appropriate catalogue search:
- Class 2: <list of popular games> and more…
- Class 3: Everything in Class 2, plus <list of popular games> and more…
- Class 4: Everything in Classes 3 and 4, plus <list of popular games> and more…
If users start thinking of the classes in terms of “a Class 1 game” rather than “a Class 1 machine”, so much the better for marketing purposes. (It could be leveraged into a tool for evaluating current desktop PC hardware or possibly planned purchases for their suitability to gaming, thus helping Steam as a whole.)
Second, Valve needs to change the conversation about price. When you buy a modern console, everyone knows that you’ll need more than one because, at best, you’ll get one generation of backwards compatibility and you may have to re-buy your games for that.
When you buy a Class 5 Steam Machine, the Steam Runtime guarantees compatibility all the way back to Class 1 and, when you buy a class 8 Steam Machine, you don’t have to re-buy anything. Furthermore, games are never locked to your console the way they are with the Wii Virtual Console.
Also, as everyone on PC knows, Steam sales allow you to build your library much more cheaply than on a regular console.
A Steam Machine is an investment in spending a lot less on the actual games.
Third, Valve needs to build on that “fewer pieces of hardware” angle. If a Steam Machine is maximally backwards compatible, why can’t they also partner with Google and/or NetFlix to include a tweaked copy of Chrome and ChromeOS apps for YouTube and NetFlix? I know for a fact that NetFlix has one.
Failing that, they could pour some effort into Shashlik to get the YouTube and NetFlix Android apps running on SteamOS in a polished way. Hell, if they’re not planning to compete with the Google Play Store, that’d allow them to add “plays select Android games” to the less emphasized portion of the Steam Machine feature list.
(“less emphasized” because it’d probably be tricky to get the go-ahead to preload the Google Play Store app and “select games” because, last I checked, most Android games used native ARM machine code and I’m unsure what Intel would want for their
libhoudini ARM-to-x86 emulation layer for Android.)
Finally, Valve needs to manage their marketing better. Allowing the excitement surrounding the Steam Machine to bleed away into “valve time”   will cripple any attempt to break into an existing market. Find someone who knows how to walk the hype tightrope and listen to their advice very closely.
However, on this front, Valve actually has an advantage that the the 3D0, CDi, and Nuon didn’t: Steam is an established, successful brand, Steam is the leader in PC game sales, they have a lot of money, and they’ve already proven a capacity for long-term thinking with Steam itself… they have the resources to succeed where falling this far off the hype train was a death blow to 3DO and friends.
…or I could be wrong and Valve made a conscious decision to put Steam Machines on the back burner when the Windows Store failed to materialize as an active and growing threat. Either way, had Valve followed this advice in the early days, the Steam Machine concept would be in a much stronger position now.