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Originally published September 22, 2013 at 8:04 PM | Page modified September 23, 2013 at 11:08 AM

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Valve’s daring moves underscore shift in digital entertainment

Geeks are anticipating and speculating on what Valve Software, an Eastside tech giant, will announce on Monday.

Seattle Times technology columnist

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Gadget enthusiasts around the world are eagerly awaiting news from an Eastside tech giant that promised to unveil new goodies Monday.

I’m not talking about the new Surface tablets that Microsoft is presenting in New York.

Those will probably be nice machines.

But geeks may instead be looking toward Bellevue, where gaming powerhouse Valve Software is rolling out a plan to turn Linux into a living-room entertainment platform.

They’re expecting Valve to finally reveal a set-top gaming device — dubbed the SteamBox after Valve’s Steam network — that will challenge the Xbox, PlayStation and Wii.

That may be wishful thinking. But either way Valve’s bold moves highlight broader shifts in digital entertainment and will raise the profile of what may be the most valuable private company in the Northwest.

There are plenty of reasons to be skeptical.

It took Microsoft a decade and perhaps $10 billion to get traction with its Xbox business. Over that same period open-source software advocates tried and tried to take Linux-based PC s mainstream with little success.

But the flavor of device you plug into the TV is becoming less and less important.

What you’re really looking for is a way to connect to a network, to get your online entertainment services onto the biggest screen in the house. Some people connect their TVs to see Netflix; others want iTunes or Hulu.

It’s the spread of the cellphone model. We’re not buying electronics as much as buying into a bundle of services, forming a relationship with a network that will extend through multiple gadgets.

Google highlighted this shift by releasing its $35 Chromecast this summer. It’s a cheap Linux gadget that plugs into a TV and streams online content.

This may be why Apple has held off on releasing a pricey TV set and instead just keeps improving its $99 AppleTV adapter, a simple gateway to its online services.

Intel is working on a similar device, called OnCue, that uses inexpensive hardware to stream premium TV content, potentially bypassing cable networks.

Game consoles are still expensive, but they’re increasingly designed to serve largely as gateways to the online networks and digital storefronts run by Sony, Microsoft and Nintendo.

Valve’s Steam gaming network is just as big, but it’s still landlocked on the desktop, unless you move a PC into the living room or cobble together a way to connect it to a TV.

Founded in 1996 by Microsoft veterans, Valve mostly is known for its blockbuster game franchises, such as “Portal,” “Left 4 Dead” and “Half Life.” It also provides tools that other companies use to build games.

But its biggest asset now is Steam, an online network for playing and distributing PC, Mac and Linux games. It has 50 million players in more than 200 countries.

Valve is so popular that when it issues an update to one of its major games, the downloads may account for 2 to 3 percent of the world’s Internet traffic, co-founder Gabe Newell said at a conference last week.

Valve has been using Steam to pursue new models of the game business, such as free titles that are supported with small upgrade purchases. Two years ago it began letting Steam users build and sell these virtual items themselves, which has since generated more than $10 million in royalties.

Valve also has been tinkering with Linux for several years, in part because of employee interest in the open-source software.

The company has been working with Intel, Nvidia and AMD to improve the performance of those companies’ graphics systems when used with Linux. It’s also been figuring out ways to make games run as well on Linux as they do on Windows.

In February Valve released software enabling Steam to run on Linux and now has about 200 games available for Linux users.

Newell sees Linux as the last platform that’s really open to future innovation, now that Microsoft and Apple have embraced the closed-garden approach that funnels apps through their turnstiles and gives them control over pricing and updates.

“Linux really is the future of gaming,” he said at a Linux conference in New Orleans last week.

It’s fun to speculate on what Valve will announce. It may release a customized version of a Linux PC, optimized for gaming and entertainment. Perhaps it will begin offering living-room PCs running Linux. It could offer guidelines or kits to build your own, or launch a Kickstarter campaign to gauge interest in SteamBox production.

Or maybe it’s something simple like making its slick “Big Picture” software interface for TVs available on Linux machines as well as PCs and Macs.

Either way Valve is using Linux in the servers that power its network.

A few years down the road we may not need any sort of set-top box. TV sets and $99 tablets at Bartell’s will be powerful enough to play hard-core games and connect directly to whatever service you’d like.

In the meantime, a SteamBox sounds really cool.

Brier Dudley’s column appears Mondays. Reach him at 206-515-5687 or bdudley@seattletimes.com

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About Brier Dudley

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.
bdudley@seattletimes.com | 206-515-5687

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