Microsoft Corporation (MSFT): Valve’s Steam Box to Threaten PlayStation 4, Xbox One

In fiscal year 2011, GameStop Corp. (NYSE:GME) made roughly $1.2 billion from the sale of used games. That money more or less amounts to a tax on the industry, as GameStop acts as a middleman — taking money away from developers and gamers.

By eliminating used games, and embracing digital distribution, Valve is able to offer incredible discounts. Although Microsoft Corporation (NASDAQ:MSFT)’s attempt to do the same has faltered, it seems obvious that the gaming companies will continue to push the industry in that direction; and if the discounts are big enough, gamers will be receptive.

Valve’s partnership with NVIDIA

Besides its Tegra mobile chips, NVIDIA Corporation (NASDAQ:NVDA) is largely known for its PC video cards. One of those cards could appear in the Steam Box.

In an interview with Forbes, NVIDIA’s Jason Paul revealed that his company is working closely with Valve. He declined to go into detail, but he hinted that their new handheld gaming console, SHIELD, would interface with Valve’s Steam Box in some manner.

In addition to playing Android games, SHIELD allows owners of NVIDIA Corporation (NASDAQ:NVDA) cards to stream games directly from their PCs to NVIDIA’s device. Nintendo’s latest console, the Wii U, comes with a tablet controller offering similar functionality — perhaps SHIELD could work with the Steam Box in such a manner.

At any rate, any investors interested in NVIDIA should pay attention to the Steam Box. It could prove to be a catalyst for its business.

The Steam Box

Given Valve’s ability to offer games at prices far lower than its console competitors, Valve’s push into the living room could prove to be enormously successful.

If that’s the case, it will represent a major victory for digital distribution, and another sign of GameStop’s long-term challenges. NVIDIA will likely play a major part in Valve’s plans, so any investors interested in Nvidia should keep a close eye on the machine.

If nothing else, the Steam Box shows that the traditional gaming landscape is going through a major transition.

The article Valve’s Steam Box to Threaten PlayStation 4, Xbox One originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

Sam Mattera is long GameStop puts dated January 2015 has no position in any stocks mentioned. The Motley Fool recommends NVIDIA. The Motley Fool owns shares of GameStop and Microsoft. Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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