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I doubt there is a plan or actual need to release the entire current catalog of Steam games on their hardware platform at first. They will probably start off with a few exclusives (Half-Life 3 being the main exclusive, I can almost guarantee that) and a good development kit. Given Steam's track record I think quite a few AAA devs might be interested.
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That kind of tactic might have worked a few years ago, but look at the console market nowadays – we have three separate current-gen consoles, rumors of the next-gen Xbox and Playstation, an upcoming Wii successor, phone games, tablet games, etc. Plus projects like the Ouya jumping on board.
Is a Steam console going to push past all of that with a couple of exclusives? If anything, making HL3 an exclusive to a new console that nobody owns is a quick way to piss off the existing Steam userbase.
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Yes, but Valve would be pushing devs to port their games over. And if the platform sells well enough, devs will make their games cross-platform from the start.
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I don’t see developers frothing at the mouth to port their back catalog to yet another console.
I think Steam’s back catalog and its pre-existing userbase are its biggest strengths in the current market – they’ve built up a commanding library and have enough customers hooked to eat the costs of any sales tenfold. Building a new platform which doesn’t draw on both of those in some way is a
very risky move.