The dream of a $400 Steam console just died. During the WAN Show podcast, Linus Sebastian dropped a bombshell that has the gaming community rethinking Valve’s upcoming Steam Machine. When he casually mentioned to Valve that he expected console-style pricing around $500, the room reportedly went silent. Not the good kind of silent. The we need to manage expectations kind of silent.
Valve’s response was clear without being explicit. The Steam Machine will not follow the PlayStation or Xbox playbook of selling hardware at a loss to make money on software sales. Instead, it will be priced like a gaming PC, with realistic margins built into the cost. For gamers hoping Valve would undercut Sony and Microsoft on price, this news hits different.
What Linus Actually Said
During his hands-on time with Valve at their hardware event, Linus Tech Tips asked directly about pricing strategy. When he expressed disappointment that Valve wasn’t taking a console-style approach to pricing, Valve representatives asked him what he meant by console pricing. His answer was straightforward – $500. The energy in the room immediately shifted, and not in a positive direction.
This wasn’t just speculation or reading between the lines. Valve essentially confirmed they’re not willing or able to sell the Steam Machine at traditional console pricing. The device will be positioned as a small form factor gaming PC, priced accordingly, rather than a subsidized console that makes money through software ecosystems and online subscriptions.
Linus went on to say he’s disappointed by this approach, and it’s easy to understand why. At $600 to $700, which seems to be the realistic price range based on component costs and Valve’s margin expectations, the Steam Machine faces serious competition from both traditional consoles and DIY gaming PCs.
Breaking Down the Economics
Console manufacturers like Sony and Microsoft have historically sold hardware at a loss, especially at launch. The PlayStation 5 was estimated to cost Sony around $450 to produce when it launched at $500. Microsoft took even bigger losses on Xbox hardware in previous generations. They make that money back through game sales, online subscriptions, and licensing fees from third-party publishers.
Valve operates differently. As a private company without shareholders demanding quarterly growth, they have more flexibility than Sony or Microsoft. But they also don’t have the same revenue streams. Steam already exists as an open platform where Valve takes a 30 percent cut of sales. There’s no PlayStation Plus or Xbox Game Pass subscription creating recurring revenue to offset hardware losses.
The Steam Machine’s estimated parts cost sits around $425 according to industry analysis from Moore’s Law Is Dead. That includes the AMD Zen 4 CPU with integrated RDNA 3 GPU, 16GB of RAM, NVMe storage, cooling, case, power supply, and controller. If Valve follows their Steam Deck pricing model, where the hardware costs around $298 and sells for $399, we’re looking at similar margins that would put the Steam Machine between $550 and $650.
The Specs Tell a Story
Understanding the pricing controversy requires looking at what Valve is actually delivering. The Steam Machine features a six-core AMD Zen 4 CPU that turbos up to 4.8GHz, paired with RDNA 3 graphics delivering roughly six times the performance of the Steam Deck. That translates to credible 4K gaming at 60fps with ray tracing enabled, at least according to Valve’s claims.
The device comes in a compact 6-inch cube form factor with an integrated power supply that pulls air directly through it for cooling. No external power brick. No massive tower case. Everything is designed for the living room experience, complete with a redesigned Steam Controller featuring dual analog sticks and four programmable back buttons.
In synthetic benchmarks, this level of performance puts the Steam Machine roughly on par with PlayStation 5, though probably not quite matching the PS5 Pro. For PC gaming enthusiasts, it’s equivalent to a mid-range build with a Ryzen 5 7600 and something like an RX 7600 XT. Not bleeding edge, but solid 1080p high settings or 4K medium settings performance.
The Competition Problem
Here’s where Valve’s pricing strategy gets complicated. At $600, the Steam Machine sits uncomfortably between traditional consoles and gaming PCs. The PlayStation 5 Digital Edition costs $450. The disc version is $500. Even the PlayStation 5 Pro, which offers more performance than the Steam Machine, costs $700 but comes with a much larger game library of optimized exclusives.
On the other end, you can build or buy a gaming PC with similar or better specs for $700 to $800. You’ll get a bigger case with better upgradeability, the full Windows experience, and access to every PC gaming storefront, not just Steam. Sure, it won’t be as compact or living room friendly, but for many PC gamers, that’s an acceptable trade-off for flexibility.
The sweet spot for the Steam Machine would have been $450 to $500. At that price, it undercuts the PS5 Pro while offering the flexibility of PC gaming through SteamOS. It becomes the obvious choice for gamers who want console convenience with PC library access. But at $600 to $700, the value proposition gets murky. You’re paying more than a PS5 for a device with less exclusive content and an operating system that still has compatibility quirks.
Why Valve Can’t Match Console Pricing
The economics make more sense when you understand Valve’s position. Sony sells PlayStation 5 at a loss because they make money every time you buy a game, subscribe to PS Plus, or purchase digital content through their ecosystem. They control the entire vertical stack from hardware to software sales to online services.
Valve makes money when you buy games on Steam, but Steam exists regardless of whether you own a Steam Machine. If Valve sold the hardware at a $100 loss hoping to make it back through software sales, they’d be subsidizing purchases that customers would have made anyway on their existing PCs or Steam Decks. The business model doesn’t close.
Additionally, Valve doesn’t charge for online multiplayer or require subscriptions. PlayStation Plus Essential costs $80 per year. Xbox Game Pass Ultimate runs $200 annually. Over a console generation, Sony and Microsoft recoup hundreds of dollars per customer through these services. Valve has no equivalent revenue stream.
There’s also the matter of scale. Sony and Microsoft manufacture millions of consoles, allowing them to negotiate better component prices and absorb costs through sheer volume. Valve’s Steam Deck has sold an estimated 3 to 5 million units since launch. Respectable for a niche device, but nowhere near PlayStation or Xbox volume. Lower production runs mean higher per-unit costs.
AMD Memory Crisis Makes Everything Worse
Timing couldn’t be worse for the Steam Machine’s pricing. The ongoing memory shortage driven by AI demand has pushed DRAM and storage prices significantly higher than when the Steam Deck launched. Component costs that would have been manageable two years ago are now eating into margins, forcing Valve to either accept lower profits or raise prices.
This same crisis is hitting AMD’s GPU pricing, as covered in recent reports about impending graphics card price increases. Memory makes up a substantial portion of any gaming device’s bill of materials, and when those costs spike 20 percent or more, there’s nowhere to hide. Valve can’t absorb those increases without turning their already thin margins negative.
The 16GB of RAM in the Steam Machine isn’t optional either. Modern games increasingly require 16GB to run smoothly, and SteamOS itself consumes resources. Valve could have cut costs with 12GB, but that would cripple the device’s ability to play newer AAA titles at acceptable settings. They’re stuck between delivering performance or hitting a price point.
What Gamers Are Saying
The community reaction has been swift and skeptical. Reddit threads and YouTube comments are filled with variations of if it costs more than $500, I’ll just build a PC. Many feel that without aggressive pricing, the Steam Machine loses its primary advantage over traditional desktops.
Some gamers point out that at $600 to $700, you’re paying a significant premium for the small form factor and SteamOS integration. For enthusiasts who already own gaming PCs, that’s a tough sell. For console gamers considering the switch to PC, the lack of plug-and-play simplicity compared to PlayStation makes the higher price harder to justify.
Others are more understanding of Valve’s position. The company has built goodwill through the Steam Deck, which delivered on its promises and received continuous software support and improvements. Fans of that device argue that if the Steam Machine provides similar value at its price point, it will find its audience even without matching console pricing exactly.
The Path Forward
Valve’s challenge is managing expectations while delivering a product that makes sense in the current market. If they can hit $550 for a base model with smaller storage and $650 for a higher capacity version, that positions the Steam Machine as a premium option above consoles but below high-end gaming PCs. It becomes the choice for gamers who value form factor and ecosystem over raw upgradeability.
The success of this strategy depends heavily on execution. SteamOS needs to be rock solid, with game compatibility matching or exceeding what the Steam Deck achieved. The controller needs to be legitimately good, competing with DualSense and Xbox controllers rather than feeling like a compromise. And the performance claims need to hold up in real-world gaming, not just controlled demo environments.
Valve also needs to communicate the value proposition clearly. This isn’t a console. It’s not trying to be a console. It’s a small form factor gaming PC running SteamOS, designed for people who want PC gaming in their living room without building or buying a full tower. That’s a different product category, and it deserves different expectations around pricing.
Frequently Asked Questions
How much will the Steam Machine cost?
Valve has not announced official pricing yet. Based on Linus Tech Tips’ conversation with Valve and component cost estimates, realistic pricing appears to be between $550 and $700. Analysts believe $600 for a base model is most likely, with higher storage options pushing toward $700. This is significantly higher than the $400-$500 console-style pricing many hoped for.
Why won’t Valve subsidize the Steam Machine like PlayStation does?
Unlike Sony and Microsoft, Valve doesn’t make recurring revenue from online subscriptions or platform licensing fees. Steam already exists as an open platform, so selling hardware at a loss wouldn’t generate additional software sales that wouldn’t happen anyway. Additionally, Valve’s production volume is much lower than PlayStation or Xbox, resulting in higher per-unit manufacturing costs.
What are the Steam Machine specs?
The Steam Machine features a six-core AMD Zen 4 CPU that turbos to 4.8GHz with an integrated RDNA 3 GPU, 16GB of RAM, and NVMe storage options ranging from 500GB to 2TB. Valve claims it delivers approximately six times the performance of the Steam Deck, enabling 4K gaming at 60fps with ray tracing. The device comes in a 6-inch cube form factor with integrated power supply.
Is the Steam Machine more powerful than PS5?
Valve claims the Steam Machine delivers performance roughly equivalent to PlayStation 5, capable of 4K 60fps gaming with ray tracing. However, it likely falls short of PS5 Pro. Direct comparisons are difficult because SteamOS games may have different optimization levels than PlayStation exclusives, and real-world performance depends heavily on individual game compatibility and settings.
When will the Steam Machine release?
Valve has announced a Spring 2026 release window for the Steam Machine. No specific date has been confirmed, but this likely means March through May 2026. Pricing and final specifications should be announced in early 2026 as the release date approaches.
Can the Steam Machine play Windows games?
The Steam Machine runs SteamOS, which uses Proton compatibility layer to run Windows games. Valve has made significant progress with Proton, and thousands of Windows-only games now work on Steam Deck without modification. However, some games with anti-cheat systems or specific dependencies may not work. You can install Windows on the Steam Machine if you prefer, but it’s not the default experience.
Should I buy a Steam Machine or build a gaming PC?
It depends on your priorities. If you want the smallest possible form factor for living room gaming, value the curated SteamOS experience, and don’t need Windows application compatibility, the Steam Machine makes sense. If you want upgradeability, maximum performance per dollar, or need Windows for work and play, building or buying a traditional gaming PC offers more flexibility even if it’s larger and less living room friendly.
Will the Steam Machine come with a controller?
Valve has not confirmed whether the Steam Machine includes a controller in the base price or if it’s sold separately. The new Steam Controller features dual analog sticks, four programmable back buttons, capacitive touch surfaces, and a wireless dongle. Based on component costs, expect the controller to retail separately for $70-$90 if not bundled.
The Reality Check
Linus Tech Tips inadvertently did the gaming community a favor by having this conversation with Valve on camera. It sets realistic expectations early rather than letting hype build around unrealistic pricing that was never going to happen. Nobody wants to get excited for a $500 Steam Machine only to see it launch at $700.
The Steam Machine will find its audience. Gamers who want powerful, compact living room PCs exist, and many are willing to pay premium prices for well-designed hardware. The Steam Deck proved Valve understands this market segment. But it won’t be the console killer that disrupts the industry through aggressive pricing. That was never realistic given Valve’s business model and the current component cost environment.
For those disappointed by the pricing reality, there’s still hope Valve lands closer to $550 than $700. Every $50 reduction improves the value proposition and expands the potential customer base. But expecting $400 or $500 was always wishful thinking, and Linus’ conversation with Valve confirms what industry analysts already suspected. The Steam Machine will be priced like a gaming PC because fundamentally, that’s what it is.