The console war ended while everyone was watching Microsoft put Halo on PlayStation. God of War ships on PC. Spider-Man runs on Steam. Forza Horizon 5 launched on PS5 in spring 2025. Indiana Jones and the Great Circle came to PlayStation months after Xbox release. The exclusives that defined platform competition for three decades disappeared because development costs exploded and publishers needed maximum market reach to recoup investments. Sony and Microsoft abandoned the competitive moat that protected their platforms from disruption. They made this decision independently for sound financial reasons without considering what happens when someone with one billion existing customers decides to sell living room hardware.
Valve operates the world’s dominant PC gaming distribution platform. Steam reached one billion accounts by 2019 and has grown since. Those accounts represent players who already purchased extensive game libraries through decades of Steam sales and regular releases. Every person with a Steam account owns games. Most own dozens or hundreds. Some own thousands. This installed base dwarfs PlayStation Network and Xbox Live combined by order of magnitude. The scale creates fundamentally different competitive dynamics than traditional console wars because Valve doesn’t need to convince players to switch ecosystems or purchase new game libraries. They just need to sell hardware that provides convenient access to games people already own.
The rumoured Steam console codenamed Valve Fremont represents exactly this strategy. Not a new platform requiring new purchases. Not a subscription service competing with Game Pass. Just a $400 box that connects to televisions and runs Steam. That’s the product. The entire threat in one sentence. A device that gives one billion people living room access to their existing PC game libraries while Sony and Microsoft scramble to explain why players should buy consoles that no longer have exclusive games justifying their existence.
Why Subscriptions Don’t Matter
Everyone expects Valve to launch Steam Game Pass and compete directly with Microsoft’s subscription service. The expectation misunderstands what makes Valve dangerous. Game Pass works for Microsoft because they’re losing the console war and need alternative revenue streams to justify Xbox’s continued existence. The subscription model makes sense when you’re behind and need to convert potential customers who won’t purchase your hardware or buy your games individually. Valve isn’t losing anything. They already dominate PC game distribution and take 30% of every sale that happens on their platform. The business prints money without requiring Valve to own development studios, manage subscription churn, or negotiate revenue sharing deals with publishers.
A Steam subscription service would actually harm Valve’s business model by cannibalizing direct game sales. Why would publishers agree to include their games in subscriptions when they currently sell those games at full price and give Valve a 30% cut? The economics only work if Valve pays publishers massive upfront fees or gives them per-play revenue shares that exceed what they earn from direct sales. Either arrangement reduces Valve’s profit margins while increasing complexity and risk. Game Pass makes sense for Microsoft because they needed to disrupt a market where they were losing. Valve would be disrupting a market where they’re winning to chase a business model with worse economics than what they currently have.
The subscription fantasy also assumes library size matters more than library quality. Game Pass has approximately 500 games. PlayStation Plus has around 700. Steam has over 50,000. But players don’t want access to 50,000 games. They want access to the games they’d actually play. Most of Steam’s catalog consists of shovelware, abandoned projects, and niche titles that appeal to nobody. A subscription granting access to everything would be overwhelming and largely useless compared to curated services that highlight quality content. The value proposition isn’t quantity of available games but whether the specific games players want are included.
Valve already solved this problem differently. Players purchased the games they wanted over years of Steam operation. Their libraries contain the specific games they chose to buy. A Steam console doesn’t need to offer subscriptions because it offers something better—access to games players already own and selected individually based on personal preferences. This provides more value than any curated subscription because it’s personalized by definition. Your Steam library is a subscription service you’ve been building for 20 years customized exactly to your tastes.
What Makes This Dangerous
Sony and Microsoft killed exclusivity because AAA game development costs reached levels where limiting platform availability meant leaving money on the table. A game costing $200 million to develop needs to sell on every available platform to recoup investment and generate profit. The financial pressure pushed both companies toward multiplatform releases that maximize addressable markets. The strategy makes sense for individual games but destroys the competitive positioning that justified console platforms existing.
Consoles previously competed through exclusive game libraries that differentiated platforms and gave customers clear reasons to choose PlayStation over Xbox or vice versa. If you wanted God of War, you bought PlayStation. If you wanted Halo, you bought Xbox. The exclusive content created platform lock-in where switching consoles meant abandoning game libraries and losing access to franchise continuations. The lock-in generated sustainable competitive advantages that protected market positions across console generations.
Multiplatform releases eliminate this lock-in by making games available everywhere. Players can choose platforms based on controller preference, interface design, or brand loyalty instead of being forced to specific ecosystems by exclusive content. The flexibility benefits consumers but removes the barriers preventing new competitors from disrupting console markets. Sony and Microsoft can’t easily defend their positions when they no longer control unique content that players can’t access elsewhere.
Valve entering console markets with Steam hardware exploits this vulnerability perfectly. The company doesn’t need exclusive games because PlayStation and Xbox already gave up exclusivity. They don’t need to build game libraries because Steam users already built their own libraries over decades. They don’t need to convince players to switch ecosystems because they’re just providing new hardware for existing ecosystems. The competitive dynamics favor Valve in ways that would have been impossible when exclusivity created meaningful differentiation between platforms.
The timing also matters because cross-platform multiplayer became standard during the current console generation. Players expect to compete with friends regardless of platform. Games supporting crossplay generate better reception than platform-exclusive titles. This cultural shift means exclusivity now creates negative perceptions where players view platform restrictions as artificial limitations rather than natural ecosystem boundaries. The change removes another defence mechanism that previously protected Sony and Microsoft from disruption.
Why Valve Won’t Do It
Valve’s hardware history suggests they understand peripheral opportunities but struggle with sustained commitment to hardware platforms. Steam Controller showed innovative ideas but never achieved mainstream adoption. Steam Link became obsolete when streaming technology improved. Steam Machines failed completely because unclear value propositions and lack of optimization created experiences worse than building custom PCs. The track record indicates Valve excels at software and digital distribution while treating hardware as experimental side projects rather than core business focus.
Steam Deck represents the first Valve hardware receiving ongoing support and planned future iterations. The device succeeded by serving portable gaming needs that existing products didn’t address adequately. The success proves Valve can execute hardware when they find genuine market gaps and commit resources appropriately. However, Steam Deck serves existing Steam users who wanted portable gaming rather than competing with Nintendo for handheld market dominance. The strategy minimized risk by targeting underserved niches instead of fighting established competitors directly.
A Steam console would require completely different approach. Living room gaming is served by PlayStation and Xbox with mature ecosystems and established user bases. Entering this market means competing directly with entrenched platforms rather than serving unmet needs. The competition requires sustained hardware development, ongoing software optimization, developer relations, and marketing investment that Valve has never demonstrated willingness to maintain long-term. The company’s corporate structure and culture prioritize employee freedom over coordinated long-term hardware strategies.
Valve also doesn’t need console hardware to continue growing Steam’s dominance. PC gaming revenue increases annually without requiring Valve to manufacture hardware or compete with console platforms. The existing business model generates enormous profits with minimal operational complexity. Entering console markets would add significant complexity and risk while potentially cannibalizing PC gaming revenue if Steam console purchases replace gaming PC purchases among existing customers. The risk-reward calculation doesn’t favour disrupting successful business to chase uncertain console market opportunities.
The company’s financial position allows experimentation without depending on hardware revenue for survival. Valve can afford to test Steam console concepts and abandon them if they don’t work. This tolerance for failure enables taking risks that other companies couldn’t justify. However, the same financial security removes pressure to pursue console opportunities aggressively. Valve doesn’t need to win console wars to remain profitable and successful. They can continue dominating PC game distribution indefinitely without risking their position through ill-advised hardware expansion.
What Sony and Microsoft Don’t Realize
PlayStation and Xbox survive because Valve chooses not to crush them. This isn’t hyperbole or fanboy fantasy. The numbers demonstrate that Valve controls gaming’s largest user base and most extensive game library while operating business model with better economics than loss-leader console hardware. If Valve decided to compete seriously for living room gaming with console hardware priced competitively and marketed effectively, Sony and Microsoft would face existential threats to their gaming divisions.
The companies got lucky that Valve’s corporate culture and business priorities don’t align with aggressive hardware expansion. Gabe Newell built Valve as software company that dabbles in hardware experiments rather than hardware manufacturer that happens to run digital storefront. This fundamental identity shapes strategic decisions in ways that protect competitors from disruption they couldn’t prevent if Valve approached markets differently.
The irony is that Sony and Microsoft created this vulnerability themselves by abandoning exclusivity to chase multiplatform revenue. They removed the competitive moat that protected their platforms and exposed themselves to disruption from companies with larger user bases and better content libraries. The decision made sense for maximizing revenue from existing games but sacrificed long-term defensive positioning for short-term financial gains. They traded sustainable competitive advantages for quarterly earnings improvements and hoped nobody would notice the strategic exposure this created.
Valve noticed. They’re just not interested in exploiting it because they’re already winning where it matters. Steam dominates PC game distribution without serious competition. The platform generates massive revenue with minimal operational costs. The business model is sustainable indefinitely without requiring risky expansion into contested markets. Valve can continue printing money through digital distribution while Sony and Microsoft fight over console market share that matters less every year as gaming shifts toward multiplatform releases and cloud streaming.
The console war ended when exclusivity died. Sony and Microsoft just haven’t accepted this reality because acknowledging it would mean admitting their platforms exist primarily through momentum and brand loyalty rather than compelling competitive positioning. They survived the transition because the company capable of disrupting them decided disruption wasn’t worth the effort. That’s not victory. That’s getting lucky your most dangerous competitor didn’t feel like competing.
