I’ve never liked the term “console war”. Leaving aside the questionable taste of aligning consoles with conflict, the war metaphor doesn’t really work for the contest between platform holders. This competition isn’t about shifting lines of engagement or the management of supply lines and materiel; it’s far more driven by twists, turns, and sudden reversals of narrative.

I guess “console wrestling match” doesn’t slip off the tongue quite as neatly. But how much more like the spectacle of wrestling than the muddy horrors of warfare is it for Valve to dramatically slide into the ring and take direct aim at the kneecaps of an already teetering Microsoft?

Valve may plead doe-eyed innocence and point out that they’re just building on their existing hardware strategy by taking advantage of the chipsets and technologies that have become available, but the timing could not be more devastating.

Microsoft is in the midst of a ponderous and complex pivot for the entire Xbox brand and platform, which is aimed at merging it with Windows and turning Xbox hardware offerings into a range of console-like PC devices that hook into Xbox game libraries and Game Pass subscriptions. The details of core parts of that strategy remain unclear, but it has recently yielded some very expensive Xbox-branded handheld PCs along with some hints that next-gen Xbox hardware will be similarly premium-priced custom PCs with full Windows capabilities.

Valve’s new Steam Machine shares some of that conceptual DNA – it’s a custom PC that will function like a console and let owners access their Steam libraries. Where Microsoft has hinted at premium pricing, though, Valve’s device seems pitched for mass-market affordability, sporting chipsets similar in performance to the current high-end consoles and likely to be priced very competitively with them.

Lower specs, however, don’t mean that the Steam Machine won’t be highly competitive. It comes with two major advantages over Microsoft’s purported device, both of them unique to Valve – the Steam distribution platform, and the unsung hero of PC gaming disruption, SteamOS.

The advantage conferred by Steam itself is quite obvious. It’s been the dominant distribution platform for PC games for more than two decades; consequently, even relatively casual PC gamers tend to have fairly extensive Steam libraries. Although it’s quite possible that Microsoft’s future Xbox hardware will let you drop out to a Windows desktop and install Steam, the appeal of a cost-effective console-like box that will have your whole Steam library sitting right there when you log in is extremely hard to beat.

Remember when Xbox Series X/S started faltering after strong early sales? At the time, Microsoft’s leadership insinuated that the failures of the Xbox One generation were impossible to recover from, because it was the era in which console owners had built up large digital libraries that they couldn’t walk away from. It will be a bitter pill indeed for Microsoft to swallow if Valve proceeds to do exactly the same thing to them in this nascent PC/console hybrid space. Yet it’s hard to imagine history not repeating itself.

Then there’s SteamOS. Valve’s Linux-based gaming OS was quite a gamble when the company first embarked on the project, but over the years the effort and resources that the company has put into this project have been extraordinary. The OS itself and the Proton emulation layer that allows it to run Windows games largely without a hitch are a technical marvel – and give Valve an immense advantage.

For all the improvements Microsoft has made to the performance of Windows as a gaming platform, the reality is that it still creates a very significant overhead on gaming devices. Even with the need for an emulation layer, Valve’s OS consistently outperforms Windows in gaming benchmarks on equivalent hardware. In real-world terms, that means Valve can launch a relatively inexpensive console running on older hardware and still deliver solid gaming performance – something Microsoft would struggle with significantly if, as expected, it makes the next Xbox into a software layer running on top of Windows.

This isn’t a hypothetical; it’s exactly the situation that has been playing out on the Steam Deck for the past few years. That device is underpowered compared to many other PC handhelds, including those expensive Xbox-branded ones. But whereas its rivals often buckle under the strain of gaming workloads, the Steam Deck rarely does thanks to its lightweight, highly optimised OS and a well-executed program of working with developers to create sensible default settings for Steam Deck owners.

Steam Deck, in fact, has been an incredible testbed for Valve in figuring out exactly how to approach this market. The idea of devices that bridge the gap between PC and console has been around for decades (Valve even made an abortive earlier effort with the original Steam Machine devices), but Steam Deck gave the most powerful company in the PC gaming space an opportunity to figure out what the missing pieces of the puzzle were – and to build those pieces from scratch if necessary.

Although Steam Deck has never been a commercial blockbuster, the foundation it has laid for the Steam Machine is rock solid. Steam Deck genuinely feels like a console in use, but plays the vast majority of the PC gaming library seamlessly, and achieves great performance from quite limited hardware specs. Applying the same lessons and approach in a home console device with a bit more headroom in the specs seems like a guaranteed winner for Valve.

There are still questions to be answered, of course. We’re making some large assumptions about competitive pricing, for one thing. There’s also a reasonable question mark over Valve’s willingness or capacity to engage in the kind of massive marketing push that usually accompanies console launches. With Steam Deck, Valve largely seemed to wish to let the hardware speak for itself; laudable, to some degree, but not an approach that’s terribly compatible with mass-market ambitions.

Nonetheless, it’s hard not to see this as a really significant turning point for the industry – and a very welcome one, seeing a new, aggressive player enter the evolving console space just as people were starting to fret about the potential decline of competition in the face of Microsoft’s woes. For Microsoft, already against the ropes in the console space (albeit still in great health as a third-party publisher, of course), Valve stepping into the ring is the absolute last tag-team entry it wanted to see – not least since the rise of SteamOS could even rob it of the fig-leaf of being able to claim that PC gaming is still entirely Windows-centric.

It’s hard not to see this as a really significant turning point for the industry

For Sony, too, this is a serious new challenge. Valve’s arrival – or recommitment – to the hardware space makes it a challenger on multiple fronts. Alongside the Steam Machine sitting in broadly the same category as the PS5, the company also has the Steam Deck, which will undoubtedly receive a generational bump once the right chipset solution comes along. Steam Deck may not trouble Nintendo’s sleep too much, but it could be a significant competitor to Sony’s rumoured handheld device nonetheless. Valve’s even launching a new VR headset that seems like a far more serious pitch at a market that Sony has never been willing to commit to as anything but a side hobby.

More competition in the console space is a very good thing, and the prospect of Valve making a really serious play to become a platform holder on a large scale should be setting cats among flocks of pigeons all around the industry. The console market in 2026 and beyond just got vastly more interesting; a dramatic turn that owes far more to the spectacle of the ring than the grind of war.