Yesterday, Valve finally revealed the launch price for its hotly anticipated Steam Machine console/PC hybrid. Prices will start at $1,049 for a 515GB without a controller, and go up to $1,428 for a 2TB machine with a controller.
These prices are far higher than Valve wanted them to be. Back in February, the company pushed back the launch of the Steam Machine as a result of memory shortages, and Valve has said that the initial batch of Steam Machines will only be available in limited quantities. Across the industry, the generative AI boom is having a seismic impact on component prices and supplies, and the Steam Machine price reveal is the latest evidence of the cost to consumers.
Although the Steam Machine is a PC at heart, it's a console in form, and going beyond the $1,000 mark is, for many, breaking a psychological barrier in terms of what consoles should cost. But what effect will the pricing have on sales? What are the implications for the upcoming consoles from Sony and Microsoft? And what does this tell us about the market more generally?
GamesIndustry.biz asked these questions to four industry analysts: Mat Piscatella, senior director at Circana, Piers Harding-Rolls, head of games research at Ampere Analysis, Emmanuel "Manu" Rosier, director of market intelligence at Newzoo, and Joost van Dreunen, CEO of Aldora. Here's what they said.
Is the price a surprise?
Van Dreunen says that he wasn't shocked at all to see Valve breaking the $1,000 barrier. "In fact, I predicted in March that we'd see the price of gaming consoles breach $1,000," he says. "If anything, I underestimated the speed: even in my most pessimistic February revision, I had the top SKU near $899, and the entry price alone cleared that. It's disappointing, certainly, because Valve prides itself on accessibility and fair pricing for consumers. But unless Valve is willing to heavily subsidize its upcoming device, it has to price in the runaway cost of memory and storage like everyone else."
Likewise, Rosier wasn't surprised about Valve's pricing. "The $1,049 entry price tracks the current component market, rather than any positioning choice," he says. "Valve set the 512GB model at $1,049, just above a clean $999. Combined with its public line that the original target is 'no longer viable', that points to minimal-margin pricing, not a marketing number. From Valve's own statements and the reporting around launch, the price came in well above the $700 to $800 band Valve had originally targeted. Valve attributes the gap to higher DRAM and NAND costs as AI data-centre demand absorbs supply."
In short, he says, "Valve is not subsidizing the hardware. Platform holders routinely sell consoles at or below build cost and recover margin on software and services. Valve's hardware has historically carried thin margins, with the business resting on Steam software and service revenue."
Harding-Rolls, by contrast, was a little taken aback to see the Steam Machine cross that significant $1,000 threshold. "Back in December I was predicting a starting price between $700 and $800," he says. "This year it was clear with memory and storage price increases that this would go up. The Steam Deck price increase was also an indication that prices were likely to be significantly more than originally aimed for."
He's certain that Valve would have wanted to come in at a much lower price point. "Valve will be disappointed it can't make Steam Machines more accessible. The company is hamstrung by its lack of hardware scale and the fact it's not in a position to subsidise the hardware through increases in software and services sales."
Mat Piscatella, meanwhile, says the price did take him by surprise. "I was thinking it would be higher, given everything," he says. "This seems like a quite reasonable price, all things considered."
How well will the Steam Machine sell?
Piscatella is sure that the Steam Machine will immediately sell out at launch, even at a $1,000+ price point. "But the question is the available quantity, which I expect will be very limited." He expects it will remain tough to find a Steam Machine for some time.
Van Dreunen thinks Valve's console will find its enthusiast core, "but it won't move console volumes at this number, and Valve can live with that," he says. "The Machine has always been a funnel into Steam, not a profit centre. More broadly, console and PC gaming are increasingly becoming a luxury category, catering to a shrinking set of affluent fans. You have to imagine that if Valve is struggling with the increased costs of hardware components, then everyone else is, too. After having crossed the symbolic $1,000 console threshold, the next milestone is the disappearance of the sub-$500 PC."
Harding-Rolls thinks that at the Steam Machine's current price point, along with its low availability and a less clear cut use case when compared with the Steam Deck, Valve will "do well to sell more than a million this year."
More generally, he doesn't see Valve's console as targeting the mainstream. "I've always held the view that Steam Machines are a niche proposition for a small subsegment of gamers that are looking for a more console-like way to experience PC gaming," he says.
"In contrast to Steam Decks, which have a clearly defined mobile use case, the Steam Machine proposition is much less established or defined. As such, it's a harder sell.
"This pricing reinforces that view and underlines that this is going to be a niche device. It also sounds like availability is going to be heavily constrained. The Steam Deck price increase and this latest pricing news makes it clear that specialist games hardware and associated markets face a huge challenge to build and maintain commercial momentum."
Rosier agrees that the volume of sales will be small, limited by supply as much as demand. "At the launch price, the Steam Machine is an enthusiast product, not a mass-market console," he says. "Its case rests on the Steam library and the living-room form factor, not price.The price strengthens the case for cloud gaming and local streaming boxes as the cheaper route into high-end play."
Does this mean next-gen consoles will also be $1,000+?
Seeing Valve break the $1,000 barrier inevitably leaves us asking whether the next generation of consoles from Sony and Microsoft will follow suit. Microsoft teased its upcoming Project Helix earlier this year, although the console – which will also play PC games – doesn't currently have a release date. Sony, meanwhile, has been tight-lipped about a potential PlayStation 6, although some have suggested it might be pushed back to 2028 or even 2029 as a result of component shortages and price rises.
Whenever they arrive, Van Dreunen expects the next generation of consoles to shoot past the $1,000 mark. "At this rate, the next generation may not even release until 2028, and when it does, north of a grand is the floor. Even existing devices are getting marked up. The companies that manufacture the necessary components have fully shifted toward selling to hyperscalers, paying a premium to build out their data centres.
"The memory makers – Samsung, SK Hynix, Micron – are now 'post-consumer', which tells you gamers matter less and prices go up. Earlier this month, Xbox CEO Asha Sharma conceded that its upcoming console is going to need a new business model and hardware partners just to ship, and that storage and memory will cost five times more by holiday 2027 than they did in 2024."
"Base next-generation models are likely to hold under $999 for psychological and marketing reasons"
Manu Rosier
Harding-Rolls still sees room for other manufacturers to stick to a three-digit price tag. "Next-gen consoles will likely be more expensive, but they have different levers that can be pulled to offset hardware costs, which can support cheaper pricing," he says. "Sony has more scale than Valve and is better positioned in terms of supply chain accessibility through its entrenched relationships and broader electronics business. Console companies will be hoping that they can take advantage of improving component inventories and more stable pricing as it gets closer to the launch of next-gen consoles. Market disruption and other factors means this is most likely to be at the end of 2028."
Piscatella agrees that $1,000 next-gen consoles aren't a given. "But it will possibly (even likely) happen anyways. Given the chaos in the world of components (and lots of other things, for that matter) the future here is beyond cloudy."
Rosier, meanwhile, thinks the base models of next-gen consoles will come in below $1,000, but notes that the floor is rising quickly. "The PS5 Pro is already at $899 after two hikes inside a year, so the distance to $1,000 is short," he says.
"Base next-generation models are likely to hold under $999 for psychological and marketing reasons. Premium tiers are a separate question. Component costs sit outside the manufacturers' control, and there is no sign of an AI-driven cooldown in memory and storage demand. Xbox CEO Asha Sharma has already said memory costs will affect Project Helix pricing and availability."
Similarly to Harding-Rolls, he notes that unlike Valve, Sony and Microsoft have historically sold consoles at or below build cost. "That subsidy capacity is what can keep a base console under $999 even as build costs climb."
But in the face of rising component costs, he sees two likely responses: "platform holders launching their own streaming boxes, and hardware-subscription models that spread the upfront cost over time."
What does this tell us about the state of the market?
In terms of what the Steam Machine's price point tells us about the evolution of the games market more generally, van Dreunen thinks we're seeing a changing of the guard. "Firms that overextended in the wake of the pandemic, buying studios and chasing scale, will now pay the price," he says. "Hardware isn't getting cheaper, so the cost of entry has to come down some other way, through distribution and business-model innovation rather than cheaper boxes, but not every firm is capable of making that transition.
"I predict a flourishing of small and mid-sized developers in the period ahead, precisely because they rely less on high-end hardware and distribute through accessible platforms. Gaming was never really a technology business. It's a cultural one that happens to run on technology, and the firms that remember this will outlast those still betting on silicon as their primary driver of growth."
Piscatella, by contrast, doesn't think Valve's move indicates much, "other than the pricing suggests perhaps things may not be quite as dire as it appears on the component front (unless Valve is taking lower margins here or had some purchase agreements already in place, tough to say)."
"Hardware isn't getting cheaper, so the cost of entry has to come down some other way"
Joost van Dreunen
But Harding-Rolls thinks the $1,000+ price indicates that parts of the market which depend on the sale of specialist games devices are coming under greater pressure as hardware prices increase. "Console companies are looking at ways to mitigate reduced access to memory and storage and the increase in component costs, but there is only so much that can be done," he says. "Unfortunately, this is a medium-term challenge that will take at least two years to start to be alleviated."
Rosier says that more generally, the cost of entry into gaming is rising, and conditions are toughest for anyone buying their first high-definition gaming device. "That tends to slow adoption among younger players and push more of that generation toward mobile," he says. "That shift is already underway. It also tends to make low-barrier titles like Roblox more relevant to this cohort than high-end AAA games, since they run on hardware these players already own."
He concludes that the soaring cost of hardware will encourage developers to stay disciplined on minimum PC specs. "Every notch up the spec ladder shrinks the addressable audience to the wealthier minority," he says. "Spec sobriety is now a commercial decision as much as an engineering one."
