Valve's Gabe Newell said his company wasn't canceling any projects after a recent spate of layoffs, and it certainly sounds like the company's Steam Box initiative is still on track. The co-founder told the BBC that his company plans to hand out prototype units of the TV-friendly gaming PC to "customers" in the next three to four months, in order to "gauge their reactions." While he didn't make it clear whether those "customers" are the companies who would be building the Steam Box, or actual consumers who might buy a Steam Box for themselves, he did suggest that there are still a number of issues to work out before we see a Steam-based game console on shelves.

"There are noise issues and heat issues and being able to [deal with] that while still offering a powerful enough gaming experience is the challenge in building it," he told the BBC. Valve is also still trying to decide whether to include biometric sensors in its custom game controller, according to Newell.

"A new experience each time they play"

If so, Newell suggested that they could do things like measure a player's heart rate to offer them a customized experience in games like zombie thriller Left 4 Dead. "You need to actually be able to directly measure how aroused the player is — what their heart rate is, things like that — in order to offer them a new experience each time they play," he said.

Gabe Newell told us a lot about the potential of biometrics, and also showed us some existing Steam Box prototypes, when we interviewed him at CES this January.