Jared Newman / TIME.com

At last, Valve has admitted it: The giant of PC gaming plans to release a living room video game console based on its Steam distribution platform.

The idea of a “Steam Box” has been somewhat of an obsession for the gaming world lately. Rumors about the product have been circulating for months, and Valve has stirred the pot with its own hints before. It’s looked to hire industrial designers, released a TV-friendly version of its software called “Big Picture” and has gone on record talking about its desire to make innovative hardware.

But in a recent interview with Kotaku, Valve head Gabe Newell gave the best indication yet that the company’s actually working on a console. “We’ll do it but we also think other people will as well,” Newell said, referring to other hardware makers who might release their own living room PCs along with Valve. Newell suggested that Valve’s hardware may run on a Linux-based operating system, in a “very controlled environment,” while users who wanted more flexibility could go with a more general purpose PC.

Why would a Steam game console be important? Several reasons:

Death to the Disc

While the established console players hang onto optical discs for dear life, Steam has already moved to a download-first mentality. And what a utopia it is. No more phone calls to GameStop to see if they have any more copies of that game you neglected to pre-order. No more going to the store at all, for that matter. Lament the lack of a used game trade if you will, but in its place Steam lets its back catalog thrive, with amazing deals on high-quality games–not just the stuff no one wanted to keep. The sooner this becomes the norm, the better. A Steam game console will only speed up the process.

Cloud Nine for PC Gamers

Steam has a chance to tie together the worlds of console and PC gaming in ways that Microsoft never did. It already has a cloud infrastructure for saved games, so players can pick up on one device where they left off on another. The idea of moving seamlessly between a desktop and the living room could be a powerful lure for PC gamers.

A Games-First Mentality

For years, the serious gamer set has watched in horror as home consoles morph into general-purpose entertainment boxes. Microsoft is arguably the worst culprit, shoving games into a remote corner of the Xbox 360 dashboard and cramming ads–usually for movies and TV shows–into every nook and cranny. But even Nintendo, which once prided itself on games-above-all, now says it’s in the “home entertainment” business. This isn’t necessarily bad, as these consoles are now helping to push all living room entertainment forward. But for folks who still want games to be front-and-center, a Steam console could be a safe haven.

Friendly to Indies

Steam was the first major gaming platform that opened itself up to small-scale development. That indie market still thrives on Steam, and while the process for getting approved was a bit opaque in the past, Steam’s new Greenlight process gives all developers a shot at distribution through community voting. A Steam console would give even more exposure to these smaller developers, who often come up with the most clever ideas.

That Whole Hardware Innovation Thing

Valve’s a freewheeling company without much organizational structure, so it’s hard to say if its interest in wearable computing is directly related to its living room console ambitions. But we can at least assume that if both these things are in development, they’re destined to come together at some point, and that’s exciting to think about.

Just to keep my optimism in check, it’s worth noting that Valve hasn’t announced anything specific. We don’t know how the cost or performance of a Steam box would compare to today’s or tomorrow’s home consoles. We also don’t know what limitations would be in place on a console of Valve’s making, (If it’s Linux-based, keep in mind that only 38 games are currently available for the Linux version of Steam — mostly indie titles.) And given Valve’s reputation for taking its sweet time on things, a promise of living room PCs in 2013 could very well mean two or three years from now.

Still, I hope Valve pulls it off. A Steam Box could be just the shake-up that the home console business needs.