Valve unveils prototype of Steam Machine

Valve's Big Picture on a television. Steam

Valve has unveiled a prototype of its Steam Machine -- a new kind of gaming console that leverages Valve's Steam software.

The video game developer and distribution company is known for blockbuster games, like "Half-Life," "Counter-Strike" and "Portal." Its Steam software is one of the most popular ways to purchase a video game through the Internet -- and now it's providing another alternative to consoles like the Xbox One and PlayStation 3. The Steam Machine is a powerful gaming computer that will run Steam's open-source operating system.

According to the Seattle Times, a variety of Steam Machines will be revealed at the Consumer Electronics Show in January. Valve wants to provide a range of gaming machines, and for hobbyists to make their own Steam Machines using its Steam OS.

Its business model is being compared to Amazon's Kindle tablet line, which has a custom operating system built around Google's Android OS. In 2011, it was reported that Amazon loses money for each Kindle Fire it sells, but selling books, movies and music is where the company earns revenue.

No video game console is complete without a controller, and the Steam Machine is no different. According to Wired, the Steam controller several buttons and two versatile track pads, which replace joysticks and buttons.

Steam recently reported it passed 65 million-users. By comparison, Microsoft and Sony report 48 million Xbox Live members and 110 million PlayStation Network members, respectively.

Valve is planning to release 300 systems and controller to beta testers later this year.

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