1. A home entertainment box does more than play games these days. Windows is still the only OS with acceptable bluray support. OSX is as out in the cold as Linux on this score even though Apple is a member of the bluray consortium! Some may be tempted to scoff at physical media, but it's still alive and well, especially with the audio/video-phile crowd.
2. If games have to be rewritten to operate on Linux, most existing games never will. Most games, once their sales have ceased bringing in cash, are abandoned and never updated again. Legacy gaming support is important. A lot of people have beloved games that are years or decades old that they still occasionally play. If switching to Linux means they have to abandon those, they won't.
If Newell is serious about his Steam boxes succeeding, he needs to support work that will let older games run on Linux without modification and he needs to support development of a bluray support package for Linux, plus any future formats. No open source software will ever legally support bluray. I like open source and I'm sure some fanatics will be tempted to blast me for calling for more closed-source software on Linux, but that's precisely what Newell is doing. He's bringing closed source, non-free software to Linux. If you want to see Steam on Linux succeed, you're demanding something free, open-source software has yet to deliver.