Over the weekend we posted Valve co-founder Gabe Newell’s recent comments about the pricing experiments that the company conducts using its Steam distribution system for PC games. During another portion of the same WTIA TechNW panel, Newell shared his thoughts on the future of game consoles — predicting that Apple will bring about big changes in the living room.

Newell’s comments came before the recent reports that Apple is working on what Steve Jobs believed to be a breakthrough television experience, based what Jobs told biographer Walter Isaacson before the Apple co-founder died.

During the Oct. 11 WTIA panel, the subject of consoles was raised by moderator Ed Fries, the former Microsoft games chief, who pointed out that the next wave of consoles is late to market. Nintendo plans to release the Wii U next year, but under a traditional five-year product release cycle, Microsoft and Sony would have already unveiled successors to the Xbox 360 and PlayStation 3.

Fries asked, “Is this going to be the last generation of consoles?”

Samantha Ryan, the Warner Bros. Interactive Entertainment executive, said consoles will be around for a while but added that she’s hoping to see the console industry become more open to different types of content, and more flexible in terms of pricing.

Fries then turned the question to Newell: “Should consoles be more open, less curated?”

Here’s the rest of their exchange …

Valve's Gabe Newell, left, and game industry veteran Ed Fries

Newell: That speaks to how we think about platforms. I think there are four pieces: there’s the Internet, there’s desktop, there’s the living room and there’s mobile.

The living room’s ability to exist independently from those others is gone. I have no direct knowledge of this, but I suspect that Apple will launch a living room product that redefines people’s expectations really strongly, and the notion of a separate console platform will disappear concurrent with Apple’s announcement. I think that the platform that’s going to win in the long run is the one that provides the best tools to content producers and to consumers for producing and discovering the right content. I think a closed model is exactly the wrong philosophical way to approach that problem.

I worry that the things that traditionally have been the source of a lot of innovation, there’s going to be attempts to close those off, so that somebody will say, ‘I’m tired of competing with Google, I’m tired of competing with Facebook. I’ll apply a console model or mobile model and exclude competitors I don’t like from my world.’ The success that Apple has had, the success that Xbox Live has had, is incorrectly signaling to people what the right strategy is, and they’ll pick exactly the wrong lessons to learn from that.

Fries: I just want to make sure I understand. So you consider Apple to be closed, not open?

Newell: I consider Apple to be very closed. Let’s say you have a book business and you are charging 5 to 7 percent gross margins, you can’t exist in an Apple world because they want 30 percent, and they don’t care that you only have 7 percent to play with.

Fries: How is Steam different? Because you run your own digital distribution system that has its own tax.

Newell: Yeah, people can use it or not use it. We give away the tools for free. They can be included in people’s products. … We’ll provide server capacity, matchmaking services, product services, and all that’s free for content developers. If a product gets sold through our system, then we take a tax. If it’s sold through retail, or if it’s sold through a developer’s website or it’s sold through Origin or Direct2Drive, then we don’t take anything.

We’re only generating money when we’re directly contributing to a sale. Our tools and services are free to use, regardless of distribution channel. If we were to create a hardware platform of our own, and put our stuff on it, the first people we would want to stand up on stage with us would be people who built competitive distribution signals, so that people understood that we actually value openness and alternatives as being critical to the long-term viability of the entertainment and games industries.

Later, during the audience Q&A, I asked Newell to expand on his thoughts about the future of consoles.

Newell: I think this notion of consoles as a separate set of APIs, a separate set of services, a separate way of connecting or developing an audience, that’s not going to be there. I think it’s highly likely that we’ll continue to have high-performance graphics capability in living rooms. I’m not sure we’re all going to put down our game controllers and pick up touch screens — which is a reasonable view, I’m just not sure I buy into it.

But this notion that consoles will exist as a separate island, as opposed to hey, you like to play a Batman game and you view it as a continuous experience between your mobile devices and your living room, and then when you’re at work, I think the latter is a lot more likely.

Previously on GeekWire: How Valve experiments with the economics of video games

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Comments

  • Guest

    There already is an Apple console today: by simply connecting iPhone with Apple TV (the set-top box, not the integrated television), you can use a protocol called “AirPlay” to wirelessly stream a game from iPhone to TV. For less than the cost of Nintendo Wii U, you get a game console with a motion-sensing, touchscreen-equipped controller. Better yet, your game will pause itself when you get a phone call!

    Fortunately, Microsoft (which dominates the game console market) is planning to counter this Apple move. Any Windows Phone 7 mobile device can be thrown at your TV for catharsis when some camping griefer spawn-kills you in Battlefield 3.

    • Snowdizx

      streaming a wireless handheld device to a TV is hardly a console… it’s merely a different output method…. 

    • guest

      Yeah I bet iPhone games look real good on the big screen. What a move! They’ve totally taken up like 90% of the console market. Gamers worship at the altar of Apple for bestowing them with such gifts and only play PS3 on the bus

    • Albaficas

      they “dominate”only in the U.S
      sry american fangirl but sony rules europe/australia and ofc with closed eyes asia

    • Guest

      You forgot the price of the iPhone itself.

  • Mike Mathieu

    My iPad2 is used pretty much exclusively as a game platform today by my kids — and that’s without Apple even trying too hard. It’s much more popular than the XBox 360/Kinect, Wii, iPhone, Windows PC, MacBook, and Windows Phone that they also have access to our house.

    • Nah

      yeah sure.
      How old are your kids? See? There is the answer.

  • Anonymous

    And google is not a candidate? Android platform simply is way more open than most! Its devices become more powerful by the quarter. (By the time ps vita come out asus tab powered by tegra 3 will be out for a few months. Out this holiday season, and is already more powerful because of its 12gpu cores! Vs 4 gpu cores in the ps vita)ps vita out early next year.
    Android is compatible with usb ports, gamecontrollers, mouse and keyboards, and has hdmi display port.
    Mobile devices will kill the handheld game console business (ds, and psp)

  • Anonymous

    Considering that only 2 of the major game engines allow you to create games natively on Apple’s OS I really don’t think Apple will have much to do with the future of Gaming aside from making what will be ‘yet another TV’. There are already ‘XBox TVs’ available in China that require no XBox so what new thing can Apple possibly bring to the table? They have no engines (aside from Blender and Unity which are mid-level at best), they have desktops that are so overpriced that serious game developers avoid them like the plague, and they have a bunch of mobile devices that play browser games and the like. UDK just announced Flash 11 support which could completely trump iOS as a format for that engine as well. Why pay the notorious ‘Apple Tax’ when you can release a Flash version?

  • Anonymous

    Considering that only 2 of the major game engines allow you to create games natively on Apple’s OS I really don’t think Apple will have much to do with the future of Gaming aside from making what will be ‘yet another TV’. There are already ‘XBox TVs’ available in China that require no XBox so what new thing can Apple possibly bring to the table? They have no engines (aside from Blender and Unity which are mid-level at best), they have desktops that are so overpriced that serious game developers avoid them like the plague, and they have a bunch of mobile devices that play browser games and the like. UDK just announced Flash 11 support which could completely trump iOS as a format for that engine as well. Why pay the notorious ‘Apple Tax’ when you can release a Flash version?

  • http://ClaussConcept.com Jason Gerard Clauss

    How on earth is a game like ArmA 2 or Microsoft Flight going to ever work on mobile? People make the weirdest predictions.

  • http://ClaussConcept.com Jason Gerard Clauss

    How on earth is a game like ArmA 2 or Microsoft Flight going to ever work on mobile? People make the weirdest predictions.

    • Me

      In the cloud. Onlive on iPad will give better graphics than a ps3 can muster… Especially if Apple used their clout and invested in OnLive to bolster the cloud servers.

      • http://ClaussConcept.com Jason Gerard Clauss

        Computing power isn’t the issue. You can’t play an immersive mil-sim or flight simulator on a tiny little display with a touch screen.

    • Me

      In the cloud. Onlive on iPad will give better graphics than a ps3 can muster… Especially if Apple used their clout and invested in OnLive to bolster the cloud servers.

  • http://ClaussConcept.com Jason Gerard Clauss

    How on earth is a game like ArmA 2 or Microsoft Flight going to ever work on mobile? People make the weirdest predictions.

  • Charles

    Honestly, you guys need to look at the facts. Apples competitors, let’s take Google for example, and the Droid RAZR, are way behind the power curve. The day the Droid RAZR came out, the software was already obsolete. Not only that, but with Droid there are so many different phones to use, that the quality of their software and software updates are complete shit. Apple has it on lock, and even if the prices are higher, the quality is too. I for one give two thumbs up to Apple and I want to see them rock the gaming world and smash Xbox and PS3. I am so sick of Macintosh’s legal BS with the Jailbreaking. It is time for a new competitor with much better weapons, speed, and style. GO APPLE!

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