Pixel P&L: Valve Enters The Console Wars

Welcome to another Pixel P&L edition. This issue takes 6 minutes to read. If you only have one, here are the 5 most important things:

• Valve is taking a second shot at the console market with a new Steam Machine.

• Nazara Technologies posted strong H1FY26 results with EBITDA surging 118.5% despite portfolio restructuring.

• Nexon CEO says gamers should assume every game company is now using AI.

• Rockstar Games faces legal claims over allegedly dismissing employees for union activity.

• Sega raises Japanese salaries by 10% as studios compete for talent.

Let's get into it.

Valve Returns to Console Market With New Steam Machine

It's not often we can point out a certain date and say the gaming landscape shifted on this day, today might be one such day.

Valve is making a second attempt at disrupting the console gaming market, unveiling a new Steam Machine that leverages a decade of development in Linux-based gaming technology.

The compact device, roughly the size of a tissue box, represents a stark departure from the company's failed 2015 Steam Machine launch. That previous iteration suffered from a limited game library on Linux, arriving dead on arrival despite years of anticipation.

This time, Valve has built comprehensive infrastructure to run Windows games on its Linux-based SteamOS without requiring developer support. The company spent years developing Proton, a compatibility layer that successfully powers the Steam Deck handheld, which has sold millions of units since 2022.

The new console promises six times the Steam Deck's performance, with demonstrated capability to run demanding titles like Cyberpunk 2077 at PlayStation 5 Pro-equivalent settings. It features automatic background updates for games and system software, plus a redesigned wireless controller offering extensive customization options.

However, Valve indicated pricing will likely align with comparable PC specifications rather than subsidized console pricing, potentially reaching $1,000 or more. This positions the Steam Machine as a premium alternative to Sony's $750 PlayStation 5 Pro and Microsoft's struggling Xbox platform, which has faced studio closures and layoffs.

Nazara Technologies Reports Strong EBITDA Growth Amid Portfolio Restructuring

Nazara Technologies reported significant EBITDA expansion in its first-half FY26 results, demonstrating strength across its diversified gaming portfolio despite one-time accounting adjustments.

The Indian gaming platform posted H1FY26 revenues of INR 1,025.2 crore, up 80.2% year-on-year, while EBITDA surged 118.5% to INR 109.4 crore. Core gaming EBITDA margin expanded to 23.2%, driven by improved retention and cross-platform distribution. Second-quarter revenues reached INR 526.5 crore, growing 65.1% year-on-year, with EBITDA jumping 146.4% to INR 62.0 crore.

Mobile gaming franchises including Love Island, Big Brother, and Animal Jam led growth, while PC/console publishing continued steady performance through titles like Human: Fall Flat. Offline entertainment brands Smaaash and Funky Monkeys delivered profitable expansion.

The latest quarter included significant portfolio changes. New regulations in India's real-money gaming sector prompted an impairment on Nazara's Moonshine Technologies investment. Additionally, Nazara's stake in Nodwin Gaming fell below 50%, triggering de-subsidiarization and a one-time fair value gain.

Joint Managing Director Nitish Mittersain emphasized these adjustments don't impact operating cash flows, noting core gaming revenues grew 159% and EBITDA rose 253% in H1FY26.

⚡️Quick Bytes

Valve Unveils New Steam Controller and Steam Frame VR Headset

Valve announced its second-generation Steam Controller and Steam Frame VR headset, expanding its hardware ecosystem. The Bluetooth controller, launching in early 2026, features conventional dual joysticks and a wireless charging puck that doubles as a low-latency connector. The Steam Frame combines standalone gameplay via an onboard Arm chip with high-bandwidth PC streaming through a proprietary wireless dongle. Prices for both devices were not disclosed.

Nexon CEO: Assume Every Game Company Uses AI

Nexon CEO Junghun Lee stated gamers should "assume every game company is now using AI" following criticism of Arc Raiders' generative AI implementation. The Embark Studios title uses AI-assisted content creation and text-to-speech voice acting, disclosed on its Steam page. Lee told Gamespark that AI "has definitely improved efficiency in both game production and live service operations," but emphasized competitive advantage depends on strategic implementation rather than technology adoption alone. 

Sega Raises Japanese Employee Salaries by 10%

Sega announced a 10% salary increase for all Japanese employees effective April 1, 2026, with entry-level graduate positions starting at ¥330,000 ($2,131) monthly. The raise incorporates bonus adjustments and flexible compensation tied to employee roles. Sega emphasized human resources as "essential to achieving our mission" of creating entertainment experiences, citing workforce investments as crucial for global competitiveness. The announcement follows a similar salary increase in February 2023, part of broader personnel reforms including childcare support and side job programs aimed at enabling diverse working styles while maximizing employee potential.

Union Files Legal Claims Against Rockstar Over Dismissed Employees

The Independent Workers' Union of Great Britain filed legal claims against Rockstar Games alleging unfair dismissal and union victimization after the studio terminated 30 to 40 employees. Rockstar attributed the October 30 dismissals to confidential information leaks, denying union-related motivation. IWGB claims the developer declined negotiations and persisted with terminations constituting "trade union victimisation and blacklisting." Union president Alex Marshall characterized the actions as "plain and simple union busting," warning that contractual clauses don't supersede UK labor protections for organized workers in private union spaces.

⚔️Side Quest

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💡Did You Know

A 32-year-old Japanese woman named Kano married an AI character she created using ChatGPT. The ceremony in Okayama featured vows, rings, and family attendance, with her digital groom "Lune Klaus" appearing via smartphone messages. Kano developed feelings for Klaus after customizing his personality through prompts following her breakup, eventually exchanging hundreds of daily messages before he "proposed" in June.

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