The TL;DR is that the organization that controls the HDMI standard won’t allow any open source implementation of HDMI 2.1.
So the hardware is fully capable of it, but they’ll get in trouble if them officially implement it.
Instead it’s officially HDMI 2 (which maxes out at 4k @ 60Hz), but through a technique called chroma sub-sampling they’ve been able to raise that up to 4k @ 120Hz.
However there are some minor reductions in picture quality because of this, and the whole thing would be much easier if the HDMI forum would be more consumer friendly.
In the meantime, the Steam Machine also has display port as a completely issue free display option.
With TVs starting to get USB-C inputs, which are displayport under the hood, hopefully HDMI fucks off.
USB-C probably cannot replace either, because the unmating force is too light. A typical HDMI or DisplayPort cable is much thicker, longer and hence heavier than a typical USB-C cable (even those specced to carry high bandwidth, like a thunderbolt cable) because they need better shielding to carry high bandwidth signals long distances - it’s not unusual to need to route HDMI several metres (but USB-C cables that long are unusual because of the different purposes)
For TVs and such it’s useful to have the inputs connect vertically, so that they don’t stick out the back of the device and cause problems pushing it against a wall. Then the weight of the end of the cable is going to be trying to pull the connector out of the TV. DisplayPort connectors can have a latch to deal with this.
Of course, there a ways around this: a new connector, for example. But it does mean that you can’t just leverage the existing pool of USB-C connectors and cables to make this ubiquitous.
Ballparking but it will likely take closer to a decade than not for that to actually happen… and I am still not optimistic. And there are actually plenty of reasons to NOT want any kind of bi-directional data transfer between your device and the TV that gets updated to push more and more ads to you every single week.
The reason HDMI is so successful is that the plug itself has not (meaningfully?) changed in closer to 20 years than not. You want to dig out that PS3 and play some Armored Core 4 on the brand new 8k TV you just bought? You can. With no need for extra converters (and that TV will gladly upscale and motion smooth everything…).
Which has added benefits because “enthusiasts” tend to have an AV receiver in between.
The only way USB C becomes a primary for televisions (since display port and usb c are arguably already the joint primary for computer monitors) is if EVERY other device migrates. Otherwise? Your new TV doesn’t work with the PS5 that Jimmy is still using to watch NFL every week.