In the world of gaming, we spend a lot of time talking about mobile gaming companies, big console manufacturers, traditional game publishers, or eSports. However, one company that is not talked about enough is Seattle-based Valve, an organization that many in the tech industry know little about.
Valve was founded in 1996 by two longtime Microsoft employees, Gabe Newell and Mike Harrington. After leaving Microsoft and securing a license to a game engine, Newell and Harrington embarked on their journey to create video games.
Gabe and Mike had no real game development experience between them and ended up bootstrapping the company with the money that they made at Microsoft. Luckily, they hired some great people to work on their first game, Half-Life. While most publishers didn't have faith in them, they eventually got a publisher called Sierra Online to help distribute Half-Life. There was a ton of hype around the game and it was sure to be a hit, except for the fact that Gabe and his team decided that they wanted to revamp the entire game at the last minute. They ended up starting from scratch and overhauling the entire game, causing the release to get pushed multiple times, from early 1997 all the way to late 1998! Nevertheless, the reaction was stunning when the game was finally released and Half-Life would go on to become one of the best selling games of all time.
Valve put out some expansions to the game that did well, but they had loftier goals. Their next trick was to open up the "modding" community. Modding a game is when players or other developers dig into the code of a game and change it to create new games. This practice was accepted by a few game developers, but shunned by most due to fear of theft or competition. Valve embraced their active modding community with open arms and some of the "mods" that were developed became as big as Half-Life itself. The most popular mod was a game called Counter-Strike which became so insanely popular that Valve brought the modding team on board (a practice they continued with other modding teams). Gamers had to purchase Half-Life in order to play the mods, and so in contrast to most popular game developers that have great initial sales which quickly tail off, Half-Life continued to have strong sales for years.
Valve was pretty quiet for the next five years and didn't show their next hand until 2003 when they announced Half-Life 2. That's right, FIVE YEARS. Slated for release in November 2003, the unthinkable happened. Valve was hacked and their source code was stolen. A crude, unfinished version of the game spread across the Internet which demoralized the company and threw off their launch plans. They later caught the criminal but the damage was already done. Nevertheless, Half-Life 2 was finally released in November 2004, and luckily it lived up to the hype and became as big a hit as its predecessor.
At this point Valve had built a solid reputation as one of the top PC game developers and their story could have ended there. However, around the time of Half-Life 2 the company launched a product called Steam. Steam was really several products in one - a digital rights management system, game distribution system, a virtual store, and later a community space. Rather than go to a local store to buy a game in disc form, Steam allowed players to buy a game online, download it straight from Valve's servers, and then be checked by those servers to make sure the game was legal. Steam allowed Valve to bypass a traditional publisher and distribute their products digitally, straight to the consumer. As Steam grew, they started selling other games in the marketplace as well and it became a vibrant community hub with a host of other features.
Fast forward to today and Steam has over 125M active users worldwide and boasts 12M peak concurrent users. Valve sold a whopping $3.5B worth of games on Steam in 2015, and while the company doesn't disclose financials, they are sure to be making much more than that due to revenue from their own first party titles. They've continued to push out hit game after hit game with titles such as DotA 2, Counter-Strike Global Offensive, Team Fortress 2, Left For Dead and Portal.
And so there you have it. Valve started by building amazing games, but ended up building a platform that lets millions of fans play, share, modify and build communities around their favorite titles. Their Stream distribution platform became a boon for aspiring game developers and became a much needed hub for the fragmented PC gaming market. Looking into the future, Valve is planning on pushing into VR with their Vive product, and they are also thinking about a Steam console with their own proprietary operating system. Regardless of what their plans might be, we can be certain of two things. First, it will be interesting, and second, it will be delayed multiple times!