Interview: Gabe Newell

Nicholas Tufnell 24 November 2011

Gabe Newell is the co-founder and managing director of video game development and online distribution company Valve Corporation. After having dropped out of Harvard University Newell spent thirteen years working for Microsoft Corporation, ultimately becoming a “Microsoft Millionaire”. Newell has described himself as “producer on the first three releases of Windows”.

Inspired by Michael Abrash, who left Microsoft to work on the computer game Quake at id Software, Newell and another Microsoft employee, Mike Harrington, left Microsoft to found Valve in 1996. He and Harrington used their money to fund Valve through the development of Half-Life. During production on Half-Life 2, he spent several months focusing on the Steam project.

As the co-founder and CEO of Valve, how would you best describe the corporation? Are you predominantly a games developer or are you predominantly a digital distribution company?

We usually think of ourselves as customer centric rather than production centric. Most of our decisions are based on the rapidly evolving opportunities to better serve our customers, and not on optimizing to be a better game company or digital distributor. The latter focus would be more of a straitjacket than conceptual aid.

Last year Forbes listed you as ‘man you need to know’ for your digital distributions platform, Steam. Could you briefly explain Steam to those who might not be familiar with it? How do you explain your success with Steam?

Steam is a set of tools and services that allow digital content creators to have a relationship with a worldwide audience. That includes support, communication, distribution, sales, and so on.

Our success comes from making sure that both customers and partners (e.g. Activision, Take 2, Ubisoft…) feel like they get a lot of value from those services, and that they can trust us not to take advantage of the relationship that we have with them.

As the creator of the hugely popular and critically acclaimed Half-Life franchise, can you say in hindsight what you feel the reasons were for its success?

Half-Life in many ways was a reactionary response to the trivialization of the experience of the first person genre. Many of us had fallen in love with videogames because of the phenomenological possibilities of the field, and felt like the industry was reducing the experiences to least common denominators rather than exploring those possibilities. Our hope was that building worlds and characters would be more compelling than building shooting galleries.

Do you consider releasing Half-Life 2 sequels in an episodic form a mistake?

Not yet.

Portal and Portal 2 have been big hits. Were you at all apprehensive about releasing a game with mechanics so unlike anything else at the time? Did you expect it to be so warmly received or was it a bit of a risk?

We are always apprehensive about everything we release. Admittedly creating a first-person puzzle game entails an added bit of apprehension. We are a privately held company, owned by the employees, largely because it gives us more freedom to take creative and design risks that in aggregate and over the long term will be less risky than a shorter term focus. The gaming community is sophisticated enough that they recognize that trade-off, want to encourage us in that direction, and will forgive us the occasional fiasco that results.

Team Fortress 2 is one of the most played multiplayer games right now. You recently made it free to play. Was that a difficult decision to make?

With Team Fortress 2 we have released a series of updates, over 150 since the game shipped in October of 2007. Steam gives us the ability to closely monitor customers’ reactions to those changes. By making a series of small steps we have reached our current design, which includes a free to play model. The fact that we’ve been getting feedback from our customers all along the way made this a fairly easy decision. If we hadn’t been able to monitor the reactions, it would have been terrifying.

Digital Rights Management (DRM) is a sensitive issue. Many games have been the subject of boycotts due to a draconian use of DRM. The most extreme DRM forces players to be online, and to stay online, if they wish to play the game. What are your views on DRM?

In general, we think there is a fundamental misconception about piracy. Piracy is almost always a service problem and not a pricing problem. For example, if a pirate offers a product anywhere in the world, 24 x 7, purchasable from the convenience of your personal computer, and the legal provider says the product is region-locked, will come to your country 3 months after the US release, and can only be purchased at a brick and mortar store, then the pirate’s service is more valuable. Most DRM solutions diminish the value of the product by either directly restricting a customers use or by creating uncertainty.

Our goal is to create greater service value than pirates, and this has been successful enough for us that piracy is basically a non-issue for our company. For example, prior to entering the Russian market, we were told that Russia was a waste of time because everyone would pirate our products. Russia is now about to become our largest market in Europe.

Do you still consider coding games for consoles to be an unpleasant experience? What makes the PC so much more desirable?

The coding part is a one-time fixed cost. The much larger problem is the restrictive nature of the customer relationship where the console owner won’t let you try to discover the best value proposition for each customer. On the PC we’ve done 150+ updates for Team Fortress 2, while on the Xbox 360 we’ve done two. We have lots of content we’d like to give to our Xbox 360 customer for free which we are precluded from doing given the restrictions under which we have to operate.

The coming year sees the launch of Counter-Strike: Global Offensive and Dota 2. Can you tell us what to expect from these games?

Counter-Strike: Global Offensive is a major update to modernize Counter-Strike and bring it to console customers at the same time. Dota 2 is what Icefrog wanted to create with Dota once the imitations of working within the MOD environment of the original were relaxed.

What do you think of the notion of e-sports? Will it ever be as popular as regular sports? Do you think we’ll be seeing live commentary on a mainstream channel for video games any time soon? If not, what’s holding it back?

I think e-sports are at a fairly primitive stage as far as the design of the audience experience. The players themselves are extraordinary. We learned a great deal staging The International, the Dota 2 tournament we held at Gamescom, about how to improve both the broadcasting production toolset and the viewer experience. One issue is giving the audience a sense of agency, which will be a critical component that differentiates the experience of e-sports from traditional sports. I think the popularity of e-sports will grow enormously once a set of design issues get addressed on the Spectation side, and that there are fundamental advantages that e-sports will have over traditional sports.

Why do you think gaming isn’t generally considered as artistically valuable or esteemed as film, TV or literature?

Given the history of new media I expect that this is just an issue of time. TV, film, plays, comics et alia all went through an initial period of condemnation and critical scepticism. I expect Homer was asked why epic oral poetry wasn’t as artistically valuable as rock paintings.

When will Half-life 3 be released?

I don’t know.

Nicholas Tufnell