As an avid gamer and headphone enthusiast excited about Valve‘s new Steam Deck handheld, I‘ve been eager to get my hands on one. And like many gamers, I wondered if the Steam Deck would hit store shelves soon so I could easily buy one at retail.
After extensive research into Steam Deck‘s manufacturing, demand, and Valve‘s business strategy, I don‘t expect the Steam Deck to be available in electronics stores anytime in the next 6 months.
While the Steam Deck may eventually make its way to retailers, here‘s why Valve is highly unlikely to authorize retail sales in the near future.
Why the Steam Deck has been limited to direct sales
Since the February 2022 launch, Valve has exclusively sold the Steam Deck through their own website. Valve has maintained tight control over sales for a few important reasons:
Limited Supply
- According to Valve, it took over 6 months from launch before they had enough units to meet demand without reservations.
- IHS Markit estimates Valve sold between 600,000 to 800,000 Steam Decks in the first 6 months.
- Considering the bill of materials is $562 per deck, their production capacity seems limited.
Avoiding Scalpers
- With only 1.6 million Steam users having reserved Decks, demand still exceeds supply.
- High desirability makes the Steam Deck a prime target for scalpers buying up retail stock.
- By selling directly, Valve can minimize scalpers exploiting shortages to create artificial scarcity.
Higher Margins
- Steam Decks have relatively low profit margins, especially the $399 base model.
- IHS Markit estimates the operating profit per Steam Deck unit is only about $20 to $40.
- Selling at retail would require lowering prices and reduce already thin margins.
Manage Support Directly
- As a new hardware category, reliability is still a concern. RMA rates in the 1-2% range have been reported.
- Retailers have less tolerance for providing support vs. Valve handling it directly.
- This support overhead is easier without retail partners.
No Immediate Need for Retail
- As a software company, Valve has no existing retail distribution network. Developing one would take time and investment.
- With insane demand already, Valve gains little from retail in the short term. Their order queue is filled for months.
Given those major factors, Valve is heavily incentivized to manage Steam Deck sales directly during the initial launch period.
When could Steam Deck reach retailers?
Given the success of Steam Deck so far, Valve would likely benefit from eventual retail distribution. Here are a few scenarios we could see play out:
Q4 2022 or Q1 2023 – Unlikely
- Supply constraints are expected to continue through the end of 2022. Valve confirmed some reservation holders may not receive Decks until Q4 2022 or later.
- Ramping up production will also take time. Even high volume contract manufacturers like Foxconn or Quanta could likely not supply a retail channel until 2023 at the earliest.
Q2 or Q3 2023 – Maybe
- By mid-2023, Valve is likely to have expanded production enough for a limited retail trial with select partners.
- However, until Apple‘s supply chain is involved, mass retail availability seems improbable. Valve may avoid overextending until capacity is proven.
Q4 2023 – Most likely
- Holiday shopping surge could incentivize Valve to ensure wide retail availability for Steam Deck.
- Even better supply would enable Valve to meet holiday demand spikes more easily.
- I expect this is the earliest we see Steam Decks widely available at major retailers.
Q1 2024 or later – Very possible
- Valve has little incentive to speed up retail distribution while direct sales remain supply constrained.
- Entering the retail game has overhead Valve may wish to delay as long as possible.
- Once the "new gadget" novelty has worn off, retail may be critical driving the next wave of sales.
Of course, it‘s impossible to completely rule out an unexpected retail shift if circumstances change. But based on what we know, 2023 seems the earliest realistic timeframe for availability in stores.
What would Steam Deck‘s retail rollout involve?
When Steam Decks do eventually make their way to retailers, what might that rollout entail?
Limited partnership(s) at first
- For their first retail partnership, Valve would likely choose a major gaming/electronics store like GameStop.
- This would reduce the number of business relationships Valve needs to manage.
- Limited exclusivity could also reward an initial retail partner for taking a risk on a new product category.
Require bundles or attachments
- Requiring accessories, games or add-ons bundled with each Steam Deck unit would discourage exploitative resellers.
- Those extra items also boost retail partner attach rates and average sale prices.
Prioritize online sales
- Even if available at retail, Valve will likely allocate limited supply to their own higher margin online sales first.
- Physical retail inventory could be bare bones and mostly serve marketing and hands-on demo purposes.
Regional/country rollout
- Launching retail sales one country or region at a time would allow Valve to control scale.
- Issues in one market would be contained and not negatively impact global retail availability.
I would expect Valve to take a very measured approach to retail, validating success in limited venues before granting widespread distribution.
How does Valve pricing compare to 3rd party resellers?
Since Steam Decks are not officially available in stores, third party resellers on sites like eBay have filled the void. But this comes at a significant pricing premium.
Here is a comparison between Valve‘s direct pricing and current reseller markups on eBay:
| Model | Valve Price | eBay Avg. Price | Markup |
|---|---|---|---|
| 64GB | $399 | $589 | 48% |
| 256GB | $529 | $799 | 51% |
| 512GB | $649 | $949 | 46% |
As you can see, reseller prices are nearly 50% higher across the board. By avoiding retail and selling directly, Valve is able to offer far lower pricing than the current secondary market can match.
Over time, adequate retail supply may close this pricing gap. But in the near term, Valve‘s direct sales model is hugely benefiting consumers.
Expert perspectives on Steam Deck‘s retail prospects
What do industry experts think about the Steam Deck‘s chances of landing in stores soon?
According to Piers Harding-Rolls, research director at Ampere Analysis:
“I think Steam Deck represents a long play for Valve. I would expect other versions of Steam Deck to arrive in the next 2 years. As production capacity increases, Valve could build an retail channel for Steam Deck."
Michael Pachter, analyst at Wedbush Securities, states:
“You won‘t see [Steam Decks] at retailers this holiday. Valve doesn‘t need retail partners yet. The product is likely selling out from their site so no incentive to wholesale."
Overall, experts seem aligned that Valve is unlikely rush into retail while current direct sales remain supply constrained.
But as manufacturing scales up, analysts expect retail availability to steadily expand, especially heading into the 2023 holiday season.
Closing thoughts on the Steam Deck‘s retail future
As someone excited to get my own Steam Deck, I‘ll admit retail availability sooner would be nice. But understanding Valve‘s incentives and production limits, I don‘t expect them in stores for at least 9-12 months realistically. The best way to get a Steam Deck in 2022 or early 2023 will be directly from Valve.
That said, I‘m bullish on the Steam Deck‘s long term potential. Once manufacturing is smoothed out, getting Steam Decks into retail will only increase their reach and gamer adoption. Especially heading into the holidays, we could see Deck availability go from famine to feast rather quickly.
For Valve, the Steam Deck represents their first serious foray into hardware and retail distribution. I expect they‘ll take a slow and steady pace expanding into stores. But over time, getting Steam Decks into the hands of every gamer is certainly their goal. And at some point in 2023 or beyond, retail will be critical achieving that.
