The analysis correctly identifies the loss-leader model but underestimates Valve's ability to leverage its massive storefront revenue to subsidize hardware. It overlooks the strategic goal of ecosystem expansion over immediate hardware profit.
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Will it be CHEAPER Than We Think? - Steam Machine Price Predictions!Added:
How much will the Steam machine cost?
That's a solid question to ask right now because especially with the Steam controller being released at $100 the other day, as well as reports that say that Valve has imported a whole bunch of quote unquote game consoles, which most likely could be potentially Steam machines. It really begs the question as to how much we need to set aside in order to buy a Steam machine. So today I'll discuss number one common practices from manufacturers who are both hardware and software companies and how they price their gaming devices as well as number two what Valve has said so far when it comes to the price point of the Steam machine and hopefully by watching this video it will give a better glimpse as to how much the Steam Machine could potentially cost. Let's check it out. So as far as big gaming corporations who make both hardware and software, it is a common practice for them to basically price their gaming hardwares at an affordable price so that consumers will buy into it even if it is selling them at a loss. Like for instance the PlayStation 5. All right, it was released back in 2020 at $500. It is now $650.
However, as far as the estimated, you know, cost to build a PlayStation 5, it was around $700 to $900, meaning that if you were to build a gaming PC that had comparable specs to a base PS5, you would have to spend $700 to $900 in order to build something that was comparable to the PlayStation 5 as far as performance goes. Now, as far as the Xbox Series X was concerned, you know, it was also launched at $500 and now it is $650, the one TBTE model. However, if you were to build a PC that had comparable specs to an Xbox Series X, it would cost $700 to $1,100.
So, yeah, as far as Sony and Microsoft are concerned, they basically price their gaming hardwares to be more presentable to the consumers. even though they were selling them as a loss, especially if it is reflecting with the components that they put in their gaming consoles. Now, you may be wondering, Joe, how is that feasible? Well, to be honest with you, as far as these corporations are concerned, their whole logistics behind selling these devices to make them more appealing to the masses, even if it was selling at a loss, is that the hardware sales are not their main focus as far as revenue streams are concerned. Essentially what they are trying to do is to get consumers to buy into their hardwares, fall in love with the hardware and potentially buy games from their storefront as well as subscribe to their services. Like for instance with the PlayStation, right, you have the PS store where it sells a whole bunch of different games and whatnot. And for Xbox, you have the Microsoft store that also sells a whole bunch of games. as far as those games are concerned, even though the gaming developers make the most money out of the games because obviously they created those games. But at the same time, Sony and Microsoft whenever you buy those games from their storefront, they get a massive cut. And then obviously there's also the subscription services for, you know, online gameplay with your friends. Like for instance with PlayStation they have the PS+ and then you know Xbox also has you know game pass which basically is also a online subscription base for gamers to play online with their friends as well as get some games that they can play for free at a certain given amount of time. So basically what I'm saying is that as far as Sony and Microsoft are concerned, sure they don't want their hardwares to fail but they don't mind selling them at a loss because they know that if you buy into their hardwares then you potentially will do much more than that. that you will buy the games, you'll buy into their services as well as potentially even buy their accessories like getting an extra controller. And those are all costs in which they can make up for the loss of each PlayStation or Xbox sold. So that's the whole logistics behind that. Now that I shared a brief history about how big gaming corporations price their gaming hardwares, I want to transition into talking about what we know so far about how Valve potentially will price their Steam machines. All right. Even though Valve has not made an official statement as to the price point of the Steam machines, Valve did say that they will not sell their Steam machines at a loss, but that they will sell their Steam machines as a reflection as to the price of building a Steam machine. All right. So, what does that mean? That means that basically whatever components that were put into the Steam machines that make up the specs and whatnot, adding those price points together will give us a rough estimate about how much the Steam Machine potentially will cost.
All right. Now, as far as me goes, I'm not a technical person, but at the same time, I did do my research as to looking up how much it would cost to build a gaming PC that has comparable specs to a Steam machine. And when I looked up, it really suggests that if you were to build a gaming PC that has comparable specs to the Steam machine, you are going to end up spending $600 to $900.
Now, as far as this is concerned, there are also, you know, leaks and rumors that suggest that Steam machines will cost 600 to $650, specifically the 512 GB model, aka the lower-end model of the Steam machine.
Now, I feel like that totally makes some sense because, you know, the lower end is always the underdog, the cheaper edition in which most people are not the most excited about. So, I feel like it makes sense to have it at the lower end price point as far as how much it may cost to build a similar spec PC that is for a Steam machine. However, for you know the higherend model which is going to be having two terabytes of storage, I feel like that could potentially be priced at a point where it is at the upper end of the $600 to $900 price point. I feel like if it is going to have 2 TB of storage, the higherend model would potentially cost around $800 to $900 because I feel like Valve, they want to make the Steam machine to be a very presentable price point between, you know, casual gamers that love gaming on consoles and are used to console price points, but also appeal to hardcore, you know, gamers where it is also a reasonable price. And I feel like $600 to $650 for the lower-end 512 GB model and $800 to $900 for the two TBTE higherend model is kind of like the midpoint where it is a bit more expensive than an average game console, but at the same time not astronomically expensive, at least for you know casual gamers. And then for you know hardcore gamers $800 to $900 for a gaming PC that is not the most powerful. It is definitely understandable to those type of people in those type of target audience. But the other thing that I feel in which Valve is potentially going to price the lower end 512 GB Steam machine at $600 to $650 and the 2 TBTE model at $800 to $900 is that it gives about a major buffer because as far as the Steam machine is concerned, it is a PC not a console. As far as it being a PC, the Steam machine is a very versatile system, right? It acts as a PC. It could be your go-to for a productivity computer, meaning that you could just use it for doing all sorts of work as long as it's compatible with Linux and not even touch the Steam storefront. All right, it functions as a regular PC that you can do a lot of things. But if you bought a Steam machine and all you do is use it as a productivity machine and you don't buy games from the Steam storefront, then Valve is not going to make money off you since you did not buy the games from the Steam storefront. And also, if you are a gamer who doesn't really use Steam, you'll use, you know, other storefronts like Epic Games or GOG, then guess what?
Valve will not make any sort of money if you were to use those other storefronts.
They won't be making money from the game sales. They won't be making money from, you know, the microtransactions from the other storefronts because Valve does not own those other storefronts. They own Steam. So that is a reason as to why I feel like if having comparable specs to the Steam machine costs $600 to $900 to build then most likely Valve will price the lower-end Steam Machine model that is $512 GB at $600 to $650 and the two TBTE model potentially at $800 to $900 to ensure that they make enough from the Steam machine to make a difference and at the same time be worth the effort.
Now, another reason that I feel like Valve will potentially price the lower-end Steam machine at 600 to 650 and the higherend Steam Machine at 800 to 900 is because I feel like Valve is lacking one major income stream compared to the other big gaming corporations like Sony and Microsoft. All right, Valve, as far as their platform is concerned, online gaming is completely free. And I am not saying this to say that they should charge for online multiplayer. I feel like it is a blessing to not charge for online multiplayer, but what I am saying is that not charging for online multiplayer also adds up the cost of the Steam machine. Because you got to understand that regardless of the type of gamer we are, whether we love multiplayer games or love single player games more, we all need community. We need friends that will love us, friends that will laugh with us. And so what I'm getting at is that we may have different preferences when it comes to the type of games we play, but at the same time, we still love to bond with our friends. And what better way to bond with our friends is to share our love of gaming with them.
And so if we are required to pay a few dollars per month to have access to online multiplayer, then we would still do it as long as we are not breaking our banks. And that therefore becomes a major income stream for the gaming corporations like Sony and Microsoft.
They make a lot of money from their subscription services. So with Valve not offering the subscription service for us to play online, we got to keep in mind that because of that, the hardware will have to come at an extra cost because it will be one less way for Valve to constantly make money. All right? They will only make money from the games that we buy from their storefront. They will only make money from the accessories that we buy. Like if we were to buy the Steam controller, they will only make money from free multiplayer games. If we were to, you know, buy extra skins for the characters as well as microtransactions. However, as far as just playing online, Valve will not make money from that and that is a major income stream that they don't have and therefore charging more for the hardware upfront will make sense. So yeah, in my opinion, I feel like we will most likely see the Steam machine come out at a price point in between $600 to $650 for the lower-end 512 GB model and $800 to $900 potentially for the higherend two terabyte model. I feel like that is really really reasonable. It's still a mystery when it comes to the pricing of the Steam machine. I feel like the reason in which Valve has not revealed the exact price point of the Steam machine is because they are still unsure about how much they should price the Steam machine. I feel like if they price it at 600 to $650 like how the latest leaks and rumors suggest for the 512 GBTE model and as far as the two terabyte higherend model is concerned if Valve price it at you know $800 to $900 then that could potentially be something in which it will draw in consumers to buy into the Steam machine no matter if they are you know casual gamers ers that grew up with consoles or you know PC gamers that just want another PC that is console like and where they can put in their living room in order to enjoy whether it is with themselves or with their friends. However, with the RAM crisis still active, it could be a great time of uncertainty for Valve to the point where they really don't know how to properly price their Steam machines.
because even though we did see some slight drops of RAM prices recently, it is still far from being at a reasonable price point. Also, even though the RAM crisis may not be hitting the Steam Machine product line as hard as the PC handheld market, it could still take a hit as we did see how the PS5 and Xbox both got a markup in price. Okay, the PS5 and Xbox Series X both launched at $500, but now the PS5 base model is at $650 and the Xbox Series X originally at $500 is now also at $650. So yeah, they did get a significant markup. So yeah, as far as how much the Steam machine will cost, even though I feel like ultimately Valve will potentially price the lower-end 512 GB model at $600 to $650 and the higherend 2 terbte model around $800 to $900. But again, we shall wait and see. But yeah, friends, what do you think about the price point of the Steam Machine? Do you think that the Steam machine will cost $600 to $650 for the lower end $512 GBTE as well as you know for the higherend model $800 to $900? Or do you think that that is too low and that Valve will price them much higher?
Would love to discuss in the comment section below. And as always, if you love gaming discussions like this one, I have a whole playlist about nerdy discussions. Most of them are pertains to PC handheld gaming so far, but I will potentially incorporate more stuffs related to the Steam machine and other things related to gaming in general. So yeah, if all that interests you, please definitely check that out. And as always, if you love this video, please like, comment, share, as well as hype this video. It will help the YouTube algorithm recommend this video to more gamers like you and me who loves these type of discussions. So yeah, thank you very much from the bottom of my heart.
And as far as my schedule goes, I try to post at 6:00 p.m. Pacific time on Tuesdays and occasionally on Fridays. So stay tuned. Once again, my name is Joe from the Nomadic Gaming Guild and game
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