Valve are developing their own Linux-based operating system. It’s specifically designed to integrate with “living room machines”. Valve are also in discussions with hardware manufacturers so it will likely be appearing built into many smart TVs.
** Update – Valve’s second announcement’s gone live. It’s a hardware beta for their Steam Box console **
Your entire Steam library will be playable on your TV. This was already possible with Steam’s Big Picture mode but that required you had the computer running the game directly connected the TV. SteamOS allows you to stream games running on a machine elsewhere in your house to your television.
Valve say they “have achieved significant performance increases in graphics processing, and we’re now targeting audio performance and reductions in input latency at the operating system level.” Suggesting the stream quality will be close to as good as if the machine running the game were in the same room.
Of course, you will also be able to install games to the machine running SteamOS should you wish.
Apparently, Valve are “working with many of the media services you know and love. Soon we will begin bringing them online, allowing you to access your favorite music and video with Steam and SteamOS.”
Valve also mention the Family Sharing system they announced recently. The system allows you to share your game library to other accounts where they can earn their own achievements and store their own saves.
You can read more about it here.