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Valve may be taking on traditional video game consoles with its upcoming Steam Box, but CEO Gabe Newell says that Apple is the company’s biggest threat to its success in the entertainment space.

Newell gave a lecture to a class at the University of Texas’ LBJ School of Public Affairs this week, and he had some interesting things to say about Apple and the mounting war for the living room…

Polygon (via The Verge) reports:

“The threat right now is that Apple has gained a huge amount of market share, and has a relatively obvious pathway towards entering the living room with their platform,” Newell said. “I think that there’s a scenario where we see sort of a dumbed down living room platform emerging — I think Apple rolls the console guys really easily. The question is can we make enough progress in the PC space to establish ourselves there, and also figure out better ways of addressing mobile before Apple takes over the living room?”

Newell makes a good point here. Apple is definitely putting all of the right pieces in place. Its Apple TV is thriving, and the company is only a software update away from turning it into a video game console.

Think about that for a second. With a single update, Apple could install an App Store on millions of set-top boxes that would open them up to tens of thousands of games. And its iOS devices, with their built-in accelerometers, would make for perfect Wii-like controllers.

As for Valve’s Steam Box, few concrete details are known about the project. It’s believed to be Linux-based, featuring Steam’s ‘Big Picture’ mode, and there’s been talk of it using Biometric tech in its controllers.

Now, mix in the fact that both of the big video game players—Microsoft and Sony—are also expected to drop new consoles within the next year, and you have the makings for a very interesting 2013.