Gabe Newell's wide-ranging keynote at the DICE Summit this morning didn't include any big announcements. But Newell did provide some tantalizing hints about how Valve is thinking about advancing the PC gaming market in a number of different ways in the future.

One of the major themes centered on the living room TV as the next major frontier for the PC. Not only will this allow gamers to take advantage of the more open and innovative gaming environment of the PC in a new locale, but it will give people access to apps they've invested in (such as Hulu, Twitter, iTunes, and Facebook) without having to worry, "Oh my god, how are we going to get that application running on our TV."

Newell said he sees the PC-in-the-living-room market segmenting into three general tiers of "good/better/best" pricing and functionality. At the low end, the "good" configurations will just treat the TV as an extra monitor for your existing PC, which may be somewhere else in the house. As things like Project Shield and Miracast have shown, the technology is there to do this using local networks at a very low price point. The tricky part, Newell said, is to make the user experience seamless. There should be no need to worry about pairing devices, configuration, audio syncing, and input latency issues.

While local home streaming is entirely feasible, Newell made it clear that he doesn't think OnLive-style centralized streaming of content over the wider Internet will ever really work. Distributing functionality over a network is one of the oldest problems in computer science, he pointed out, and having smart nodes at the ends of the network has turned out to be the best solution. "Cloud gaming works until it starts to be successful, when it falls over from its own success," he said. Furthermore, future gaming applications are only going to be more sensitive to the latency inherent in Internet streaming.

On the "better" tier will be standard PCS in a console factor and price point. There's nothing magical about console hardware, Newell said. The PC has been evolving so quickly that gamers and developers should be able to take advantage of the massive expenditures on hardware without worrying about throwing it all out every five or six years when the console "upgrade" cycle comes along. Newell reiterated that he's less worried about how console makers will respond to this and more worried about Apple, which already has a much less "lumpy" upgrade cycle through its iOS devices.

For Newell, the high end "best" tier of devices will take advantage of the scalability that PCs have always excelled in. Adding things like more 3D performance, storage, or a faster connection will be just as easy on many living room PCs as it is on standard office desktops. Newell envisions many vendors offering "sky is the limit" $4,000 living room PCs. Valve's job is to make sure the experience on those devices is as good as possible.

Newell views his three tiers as complementary, not competitive with each other. It won't take much for someone on the low end to upgrade to a high-end machine that is better than the fastest console, all without having to give up their existing library of games or peripherals.

But the biggest problem stopping living room PC gaming from being a reality according to Newell is controls. Valve is thinking quite a bit about the input side of games, particularly how to best unify a world currently segmented into keyboard/mouse, motion controls, touch controls, and traditional gamepads. "We don't want to sell a bunch of [controller] hardware," he said. "We want to move things forward. We'll sell hardware if we have to, but the big thing is to think through these issues."

"We can't compete with our customers"

Newell's second point of emphasis concerned user-generated content. Newell said user-generated content may have revolutionized the game industry, but developers still have to change the way they think about encouraging and monetizing this content.

"We can't compete with our own customers," Newell said. "Our customers have defeated us, not by a little but by a lot." This isn't just about putting cute antlers on an in-game dog but about players building content as good or better than pro developers at an incredible rate. Valve has seen liquidity issues in its games as players hoard items that are de facto currencies, and the company had to deal with trade balance issues as goods travel from one game to another.

Valve now thinks of its games as part of a huge economy, essentially productivity platforms for goods and services. One thing that's still needed, however, is for these markets to be persistent. That way, you don't have to effectively burn down the house you've built in one game when you move on to another. Borrowing some MMO terminology, Newell said he sees all games essentially becoming "instanced dungeons" of one central economy. "All games should maximize the ability to transfer goods and services," he said. "If Dota2 can't trade with Skyrim, that's a global failure."

This process has already started with the Steam Workshop, where some content makers raise more than $500,000 a year selling in-game items they make across games. But Newell wants to extend the idea of what counts as an in-game good even further. If a well-known pro gamer can digitally "sign" an item to increase its value, that should be something a player should be able to monetize. If a player can create a "quest" to go kill his brother in a game 20 times, he should be able to offer money for that in the marketplace. Tool developers should see their software as free-to-play games, monetized through a share of the proceeds their users earn when selling items made using those tools.

The idea of user-generated content should even extend to the idea of the Steam storefront itself, Newell said. He teased the idea that individual players would be able to build on the Steam experience with their own stores that sit on the front end, selling their own curated collections of content. Any community or "editorial perspective" will be able to take their experiences and present them to their audience through that storefront, he said.

Furthermore, Newell hoped Valve could get out of the business of curating the Steam storefront in the first place, removing the approval process bottleneck to get on the storefront. Someone will still have to worry about issues like viruses and protecting copyrights, but Valve is currently thinking of ways to eliminate the barrier between content creators and those who want access to the game. "Customers should have distribution frameworks, but the idea of someone acting as 'global gatekeeper' is a pre-Internet way of thinking."