Can everyone please stop claiming and speculating that Valve’s new hardware will be loss leaders? If you watch LTT and Gamers Nexus’s first videos on the announcement, they actually spoke with Valve’s engineers. And the Valve representatives already said that the new hardware WILL NOT BE LOSS LEADERS.
There isn’t even evidence that the Steam Deck was a loss leader. All GabeN said was that the lowest cost launch model was priced “painfully”, which doesn’t necessarily mean it was sold at a loss, it could easily have been sold at a very tight margin.
And no, low margins does not meet the definition of a loss leader. A loss leader is a product sold below cost, in that every unit sold actually costs the seller money.
I get the desire to speculate on new hardware. It’s fun and it helps pass the time until we hear more info from Valve. But there’s limits to what is reasonable. Valve has already stated that the new hardware won’t be loss leaders, so hoping and/or claiming they are isn’t reasonable.
Sorry for the rant, but all of the comments that seem to have only skimmed headlines are quickly getting to me
Console manufacturers sell at a loss because they need to sell the console first before they can sell anything else. They can expect to make that money back on software the user could not have bought without the console.
Valve doesn’t need people to buy Steam Machines to get them to start using Steam. In fact, I suspect most units sold will be to users who are already invested in the ecosystem. Selling at a loss would just be a straight loss to them.
Console manufacturers haven’t sold at a loss in a long time.
I agree, it won’t be huge gains directly for them, but even moving people off of Windows benefits them by removing control a competitor (Microsoft) has. I somewhat agree that it won’t be sold at (much of) a loss, but maybe at cost. I’m sure they expect manufacturing prices to go down over time, and engineering was a one-time investment, so sold just below cost doesn’t seem unreasonable to me at launch, which then becomes at cost or above in the future.
This all depends on if their goals for it are short-term or long. Historically, they seem to target long-term. That’s why I think it’ll be as low as they can make it, which they also said they’re doing by only having 8GB VRAM as cost savings. They want to drop the price as low as they can to compete. They won’t compete at $1k. I doubt they’d compete at $600-700. I suspect they’re targeting $400-500, which seems like a reasonable cost for the hardware too.
Does Nintendo not sell at a loss?
Probably true, but there is a chance they might convert some console gamers…
But not enough to bet on it with a loss leader probably.
If it was a loss leader and non gamers also look to buy it and never touch steam. Doing that at a loss isn’t a great idea.
They may be trying to muscle in on traditional console territory.
Steam has a well tenured reputation for having inexpensive games. They may be leveraging this to appeal to the console players turned off by the all recent price hikes.
I suspect the gabecube may be close to if not, at cost. I don’t think it’ll be at a loss.
Gabe has previously claimed that they developed the index because they didn’t want VR to die and even gave grants the game developers who made VR titles.
So it’s established that Steam is big enough and secure enough to risk cultivating new or disrupting old markets.
Operationally steam has low overhead and insane profit margin. Unless they fuck up the steam store they’re guaranteed massive profit.
If the new hardware flops and they lose a bit of money; Gabe just buys one less yacht and steam ticks on as normal.
As you say valve are incentivised to do this because it will move more people over to Linux. I suspect that they want that more than they’re really bothered about hardware sales so while I don’t think it’ll be sold at a loss, because frankly that would be stupid even if they could afford to do it, but I don’t think it’ll be anywhere near as expensive as some people seem to be claiming.