Im going to rewrite my comment since the context wasn’t there. I initially stated “why not sell the steam machine at a loss if they shattered revenue records”? I take this to mean that they made way more money that expected.
The second steam machine could have been a chance for Linux to go mainstream and put pressure on Sony and MS. To me that is reason enough to sell the console at a loss. Especially if it meant bringing Steam into more average buyers living rooms.
Steam machine is just a mini PC preinstalled with SteamOS, so just regular hardware at the end that can’t force users to buy only Steam games like on consoles that don’t let you change the OS or even install alternative software.
And I think not running things at a loss like many bigger companies do leads to a more sustainable company that keeps them for going down the route of companies like Microsoft or Facebook. Risky ventures that don’t pan out can push them to do sketchy stuff to recoup costs, or start firing staff they hired too much of due to not meeting projections.
I don’t think the sell at loss maybe make back profits later ends up being a good business model. Not just in company culture being damaged but stuff like negative repercussions towards consumers and employees.
Loss leaders don’t have to literally force people to buy your other stuff. Supermarkets sell a bunch of things at a loss that they know people are price sensitive to, because most people don’t do their weekly shop spread across multiple supermarkets. That, after all, is how supermarkets took over from the butcher, the greengrocer, the baker, etc. So it may still be that selling Steam Machines gets people in the door and more likely to buy Steam games.
But in this case this is a fairly picky point. People who aren’t already in the Steam ecosystem are fairly unlikely to buy a Steam machine, I would say, so a lot of your potential customers are already buying those games on Steam and you gain nothing. Maybe due to the form factor it replaces an XBox and so those people buy more games on Steam rather than on XBox? Hard to say.
Certainly the safer bet is to aim to at least break even.
Sustainable loss leaders are stuff like chicken or hotdogs at Costco. Easily sourced and no supply constraints and inexpensive relative to other goods they sell. Not expensive hardware during times of components rising in price along with supply difficulties while costing more than products they primarily sell.
Valve’s problem isn’t even that their hardware isn’t selling, but that they dont have enough. And I dont think people realize how small Valve’s manufacturing division actually is with how it took years for the Steam Deck to sell 6 million while the Switch 2 did 6 million in a month.
They probably don’t have the supply line to produce enough, why not just sell it at the higher price if it’s all you can produce and it sells out anyway
Because they want to make more money, not less money.
Would probably cause some people to scream about a monopoly if they did that.
