Last year, Valve attempted to bring Steam to the living room through Big Picture. It worked well enough, but it required you to plug your PC directly into a TV. With its next breakthrough, Valve will now bring your PC to the living room through a dedicated operating system.

This afternoon, Valve announced SteamOS – a Linux-based operating system that will bring all of your PC titles to the big screen. Valve will be doing this in one of two ways. The first is OTA streaming from your PC. In other words, you’ll use SteamOS to stream games powered by the PC in your bedroom to the TV in the living room.

The second, and much more exciting option, is SteamOS itself. It will be a native option where the games run on SteamOS. Think of like Valve building a version of Linux that’s specifically made to play games. Valve says that it’s already “achieved significant performance increases in graphics processing” with SteamOS, and now it’s working on audio performance and input latency reduction.

Of course, any operating system is only as good as the support it has. Unlike other players in the PC scene, Valve has the kind of clout to announce something like this and have developers already working to support it. As such, Valve says we can expect the first native SteamOS games to launch sometime next year. We’ll even see the usual AAA blockbusters that usually only support Windows supporting SteamOS as well.

Besides the potential for games, the most exciting thing about SteamOS is that it will be completely free and completely open. That means manufacturers will be able to freely experiment with living room PCs running SteamOS, and software creators will be able to muck around with SteamOS to create their own versions. Valve even hints at some game development features as it says that “gamers are empowered to join in the creation of the games they love.”

So, when when will the general public be able to try out SteamOS? Valve says that it will be available as a free download soon. It will also open itself to free licensing from hardware manufacturers at around the same time. You can bet that Valve will have its own hardware on offer though.