In Star Wars, Yoda famously said that there were only two Sith
Lords -- "No more, no less; a master and an apprentice."
His words held true for the game industry for several years.
Sega and Nintendo (OTC:
) successfully prevented Panasonic (NYSE:
), Philips, NEC Corporation and other manufacturers from making
headway. When Sony (NYSE:
) beat the odds in 1995, it was the kiss of death for Sega,
ensuring that the industry continued its two-console race.
That changed when Microsoft (NASDAQ:
) entered the scene. Instead of ousting Sony or Nintendo (both of
which were too powerful to be taken down), Microsoft carved its
By the time the Xbox 360 was released, Microsoft had become a
fierce competitor. According to data compiled by
, the console has outsold PlayStation 3 by roughly 1.6 million
Now that PlayStation 4
has been unveiled
, Microsoft is all but guaranteed to announce the next Xbox this
summer at the Electronic Entertainment Expo. With Nintendo's Wii
U already on store shelves, it seems that the three-console
conflict will continue this generation.
However, there is one company that hopes to disrupt the
battlefield: Valve. Best known for the Half-Life, Counter-Strike,
Team Fortress and Portal series, Valve is currently building a
console that revolves around its online game service, Steam.
No physical games are sold through Steam; instead, all game
content is downloaded online. This is the kind of platform that
other game manufacturers would like to implement in the
For now, the demand just isn't there -- download speeds are
too slow and consumers are still heavily attached to the
traditional disc medium. Game downloads also require massive hard
drives, which has created another set of challenges that have yet
to be resolved.
Valve has an advantage in this regard, as its primary
customers prefer to download games online. In designing the Steam
Box, the company's first console, Valve is attempting to serve
that market while reaching out to new customers.
"The internet is super smart," Valve CEO Gabe Newell told
. "If you do something that is cool, that's actually worth
people's time, then they'll adopt it. If you do something that's
not cool and sucks, you can spend as many marketing dollars as
you want, [they] just won't."
Newell must be convinced that he is doing something very smart
with the Steam Box. Even if he is, that does not mean it will be
the death of a stalwart.
Just as the industry grew several years ago and allowed a
third player, Microsoft, to enter the scene, gaming is bigger now
than ever before.
240 million individuals
purchased the last three consoles -- Wii, Xbox 360 and
PlayStation 3. Steam Box should be able to take a piece of that
massive pie without hurting the competition.
That said, most companies do not hit a homerun on their first
try. While the original Xbox sold less than 25 million units,
Xbox 360 sold
more than 74 million units
Steam Box could be very successful, but it will likely attain
that success on a much smaller scale than the big players of the
When the company launches its second console, however, it may
have evolved into a formidable console maker. At that time, Valve
might have what it takes to oust an existing player -- but it
won't happen yet.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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