Originally published on GamesIndustry.biz, today's wide-ranging interview with Valve co-founder Gabe Newell touches on everything from the decision to extend Half-Life 2 episodically and introduce advertising to online multiplayer game Counter-Strike, to the future of the Steam business and what to expect from the next five years of gaming hardware. It also offers an insight into how Valve is structured, and why the developer believes listening to its customers is paramount to its success.
Eurogamer: Apart from the ability to launch content at shorter intervals, why was it important for you to have these three episodes of Half-Life stand apart from one another?
Gabe Newell: I think we were trying to be responsive to the feedback we were getting from customers, in the same way that Half-Life 2 tried to respond to what we were hearing from people after we released Half-Life 1, and Half-Life 1 was our own response to what we saw as being the positives and negatives in the genre at the time we did it. So, we wanted to move the story forward faster, we wanted to be able to adapt to hardware changes faster, we wanted to try to manage risk on the project rather than making them five years long which really limits you in your ability to try out various things. Those were some of the main reasons.
Eurogamer: Do you regret using the term "Episodes" for them at all?
Gabe Newell: We're really just tinkering with the formula. I sort of wish in general that game developers would try more experiments, because as an industry we're all going to benefit if everybody's not trying to duplicate exactly what was successful by somebody last time, because we're really going to learn. So some people are, you know, the Sam & Max stuff is coming out on something like a monthly basis, so it's going to be interesting to see what kind of experience they have from doing that, and we're taking the amount of time we are and that will be instructive in terms of how much we can get done versus how long it takes us to do and that kind of thing, so we're all going to be learning a lot from each other over the next couple of years as to what works best for customers with which kind of properties. Some properties I suspect and some genres I suspect will benefit more from shorter release cycles and others will work better with longer ones. So we're all going to learn. We're going to do three episodes and sit down and talk to our customers and find out what worked and what didn't about that approach and adjust accordingly.
Eurogamer: You mentioned the need to experiment - something that's been announced in the last week is in-game advertising in Counter-Strike. Why did you choose to do that now? I read an open letter from a server admin who made the point that he's hosting the game, so why shouldn't he expect a cut?
Gabe Newell: Well we're looking at a variety of ways of funding these development projects and it probably benefits us less than other kinds of developers. We're very successful with the retail model of large-scale projects; we could have just kept turning the crank on that. I think where advertising-supported projects will be interesting is the degree to which it continues, you know the same way Steam hopefully broadens... one of the issues that it solves is broadening the distribution of games like Red Orchestra, which deserve to reach an audience. I think that we're also going to start to see games that would struggle to get traditional publisher funding find that advertising is a great way of finding and developing an audience, and that's why we're putting the effort to make it possible for people to use Steam to do advertising-supported games. So we really see this as another option that we and other developers can use to figure out how to fund projects going forward.
What I would hope to see is that small developers can give away their titles for free and garner ongoing development support by generating advertising revenue, and we've done all the work to make that possible through the work that we're doing in Counter-Strike. That's certainly the hope. Another aspect in addition to broadening monetisation options and funding options, especially for new developers, is the possibility of segmenting your audience. So any time you can give people more pricing options, that's always been a good idea. Some people will prefer it one way and some people will prefer it the other way, but it really requires us - especially as the technology provider that a lot of developers are starting to depend on - to do it first and get it out there, work out the kinks in the system so that they can then use it to trial things themselves.
Eurogamer: But do you sympathise with, say, the guy in Germany hosting a CS server who wonders why he should pay to serve your ads? Is there a feeling that they could cut in on that income?
Gabe Newell: We haven't really thought about that. If they want to talk to us about it then they can. I think in general... there are between 150,000 and 180,000 servers around the world, so I think we've traditionally done a good job of supporting those people and giving them what they need to be excited about running and hosting servers. That's why it's an order of magnitude larger than any other server community for any other group. We're certainly always interested in engaging with any server operator to find out how we can do a better job.
Eurogamer: How would you sum up the current state of the Steam business?
Gabe Newell: The Steam business? It's going great. I think that we're continuing to get a clear idea of what we need to do next for consumers, how to make Steam more useful to them, how to solve problems. I'm pretty excited about finally getting some display drivers - the ATI announcement included that - where rather than having the situation they have right now where there are literally tens, close to hundreds of display drivers out there on people's machines, that everybody will have the most current, the most up-to-date driver, automatic bug-reporting and things like that. That's a nice step forward.
Eurogamer: There's the Steam Community stuff as well coming up.
Gabe Newell: That'll also I think provide a lot of value to customers as well. We also need in addition to make the customers happier. We need to make sure we're listening to and developing the features and functionality that other software developers need to make it more useful. There are little things, like being able to have better control over international pricing, and have day and date releases in Russia and things like that that as we talk to people and find out what's important to them - we have lots of those kind of check-boxes to check, and as long as we keep doing that I think we'll continue to see excitement about Steam building.
Eurogamer: Denis Dyack told GamesIndustry.biz recently that he reckons a future unified gaming console is inevitable at this stage. What do you think about that, and what do you think's going to happen to gaming hardware in the future?
Gabe Newell: Well, you know, as long as you've got Microsoft willing to lose six or seven billion dollars to push a hardware standard, it's hard to see, you know... as long as people are willing to absorb losses on hardware. Sony's doing the same thing. I think they just announced three quarters of a billion dollars in losses. As long as you've got people willing to do that, it's hard to see why gamers aren't going to want to have subsidised hardware from those people, so I'm not sure how soon we'll get to unification.
I think the thing that - from a technology perspective rather than the hardware issues, is really exciting - is this collision that's coming up between the GPUs, which have had these really light execution capabilities and the CPUs, which have had great compatibility stories and great single-thread execution capabilities. Those two design or architectural characteristics are going to converge and we're going to end up being in a world with all these huge numbers of homogenous cores and it's going to require us to rethink our approach to how we design game engines, but I think it's going to vastly improve the kind of game experiences we can give people; the kind of huge acceleration of just graphics quality that we've seen over the last couple of years is going to apply to all of the other aspects. AI, physics, game behaviour - all of that's going to suddenly be able to benefit from the same kind of scalable growth that we've been seeing on the graphics side, so that'll be I think one of the major characteristics of the next five years is watching that sort itself out.
Eurogamer: You mentioned games escalating in terms of technology, but you've also got games - Portal in particular - that have the potential to work on a smaller scale. You could potentially fit it onto something like Xbox Live Arcade. Are you thinking of doing smaller projects like that for downloadable services?
Gabe Newell: I think that that's one of the factors that you look at in your design is what's the footprint and we need to do a good job of enabling that both for ourselves and for people who are relying on us to solve those kinds of problems for them.
I think our problem right now is we almost always come down on the side of making things bigger and more fabulous rather than making things smaller and faster to download, and that has an impact both on our footprint and on our schedules, which always... you know, we've never met something cool that we didn't end up deciding to put in the game as opposed to hitting a ship date. So, it would be a really good exercise for us. Just talking to somebody who has to run a company, it would be a good exercise just to go off and try to do these even smaller and more focused projects. I think that that would be good for us and a nice change of pace.
We've had a couple of internal proposals to do things like that and I think it's a smart thing to do. I think anybody that has a big sort of tadpole game would really benefit from building those much smaller experiences, especially if you can leverage the assets that are already on the person's machine. So it'd be nice if it were small, but it would be nicer if the download were even smaller taking advantage of the fact they've already got Half-Life 2 or Unreal or Doom III installed on their machine.
Eurogamer: How have your views evolved about what makes a good first-person game since you shipped Half-Life 2?
Gabe Newell: I think the question I'm personally wrestling with right now is the bigger entertainment experience that people want to have. I think that we have these accidents of production technology - you know like 'I know how to make games' or 'I know how to make comics' or 'I know how to make action figures', and I think we're missing the boat in terms of what customers really want to have, which is a more comprehensive entertainment experience, so that's what I'm really scratching my head about a lot right now. Does that make sense?
Eurogamer: What sort of things are you tossing over in your head about that?
Gabe Newell: Well when you look at what people are responding to really well right now... If I'm a fan of Pokémon, right, I go to one place to get my Pokémon DVDs, I go to another place to get my Pokémon cards, I go to a third place to get my Pokémon games, and the development of those things occurs in completely separate groups with completely different notions of quality and so on, and clearly people want to have a more integrated experience than that, and we're just not doing a good job of providing for that. Figuring out the right thing to do there is something I'm scratching my head about a lot right now.
Eurogamer: It's clear you have a very business-orientated mind, but you don't have any managers here and you have almost a very freeform structure to the business. How did you come to decide to work that way?
Gabe Newell: I worked in a bunch of different kinds of organisations, and I think they're better suited for different kinds of problems. Very hierarchical, very command-and-control organisations work really well for doing the same thing over and over and over, where removing defects is your main goal. It's like if you're making cars or you're doing product support, repeatability and defect-detection are critical aspects and you need to build an organisation that works well, but I think that the challenges that we have right now in the games industry, specifically and more broadly in the entertainment industry are about inventing new things, about seeing things that occur between disciplines.
So a lot of time the people who are most successful doing that here at Valve are people who are engineers who have fine arts background, and our goal is not to make them increasingly narrow and increasingly specialised but instead push them to be broader in their perspective and see the opportunities for what hasn't been done rather than to do what's been done in the past more cheaply or with greater quality. So the organisation that supports that is one that minimises the boundaries between, not emphasises the restrictions and values specialisation, so that's why we don't want people thinking of themselves as increasingly specialised and narrow in their focus; we want people to say, 'you know what, I was thinking about this problem and it's not really an engineering problem, it's really this kind of problem; it's a production problem, it's a tools problem, it's an art problem, and here I can show you because I think broadly enough'. So to that extent titles are not particularly helpful to us in terms of getting people to be more successful.
Eurogamer: The people are more important.
Gabe Newell: The thing we talk about most publicly in terms of how we do things is the cabal approach - the collaborative, iterative approach. We work very, very hard to keep people here because so much of what's necessary when you're doing this is experience with the other people around you. Like, we [gestures to Doug Lombardi] have been working together for ten years and it really helps that we have that shared history to draw on when we feel like... It's much easier for us to take risks, like, 'oh, let's do this Orange Box thing,' which... We had enough of a history to say these are the positives, these are the negatives, and have confidence in each other's judgement and know where each other's coming from. So it would be much harder to do that if we didn't have that shared history.
That's true for lots of things. I've been working with everybody here for a long time, and we get better. It's one of those things that when you ship a product you learn a bunch of stuff about how to do that better, and it would be a tragedy to lose that. So that's another thing that contributes to our ability to do this is just the longevity of our shared experience. People change roles a lot inside of the company.
Eurogamer: Given your comments that entertainment needs to be more integrated, and that you've got a company full of people who are in a position to invent rather than being stuck to one role, are you open to the idea of moving into other mediums besides games?
Gabe Newell: I think that we're really trying to let our customers tell us what they like and what they don't like, and we seem to get a really good response. One of the things we released recently was the movie for the Heavy Weapons Guy [one of the character classes in Team Fortress 2], so the feedback we get from that, we go in and read forum posts, we get email telling us what they like and what they don't like, and then we say we should probably do more of those, right, people like those.
It's not a chunk of gameplay, and we don't make any money from it, but maybe that's something where we could wrap some advertising around it and put that out on Steam and do a lot of those rather than just doing a bunch of one-offs. So right now we do a minute-and-a-half narrative piece, our output is fundamentally interactive property and people like them, so that's a signal that maybe we should do more of those, and so we'll just watch that and at some point people might say, 'you know what, I wish I'd had an extra map rather than the thing that you did'. It's the same way we did with commentary. We trialled it with [Half-Life 2 add-on] Lost Coast and because of the feedback we got, we've put it an order of magnitude more into Episode One, and in Episode Two there's a huge increase yet again.
The thing is, there are many forum posts, and we go through and if something gets posted on YouTube we read what everybody says there, and I read every piece of email. I don't respond to every piece of email I get because I can't but I do read every piece of email I get, and try to synthesise that into the clear sense of how we can do a better job with our products. We pay attention. It's hugely valuable to us how articulate and thoughtful the community is, because any game developer is going to benefit enormously from paying attention to what people have to say. It's like with the press. You read the reviews and you pay attention and it's going to help you understand what you're doing right and what you need to work harder at. So we continue to benefit from that.
Eurogamer: You've partnered with EA for distribution. Why did you choose to go with EA?
Gabe Newell: It's pretty straightforward. We went around and talked to all the people we could use and for some of the markets that we're in EA is a great partner for that and for other areas we work with other people, but we've been really happy with EA; they've done a great job for us. Sometimes EA gets painted a little bit as the boogeyman... we keep waiting for them to jump round the corner! And it hasn't happened. We've been really happy with everyone there and the job they've done for us.
Eurogamer: An analyst suggested to me that maybe the deal was a portent to something larger like an acquisition. But you want to remain independent, presumably?
Gabe Newell: Yep. I think that part of why... I think something that contributes to our ability to be successful is that we don't have external financing on our projects; we don't have... there's no venture capitalists breathing down our neck, and I think that helps us make decisions that are more focused on what customers will like than what a third party has an opinion about.
I've started getting to know people in the film business, for example, and it's shocking how much interference there is in what should be really straightforward product development decisions. People suddenly have an opinion and have really terrible opinions that break the development process, so, as frustrating as it can be in the games industry, in the feature films business there are whole other levels of people having opinions. I was talking to somebody about how a movie was almost shut down because somebody's agent decided that they didn't like some lines of dialogue that the character was doing. This wasn't the actor who was saying this; this was the actor's agent saying, 'you have to rewrite this because I think it should be different'. They were totally wrong. They were making a decision that they thought was beneficial to their actor's career and not a decision that was going to make the movie any better and that's like, wow.
I'm glad that we have orders of magnitude greater ability to make those decisions that we think are the right ones, that customers will say 'good job' rather than worry that some third party's going to step in and tell us to ship on a particular date or take this out or put this out or whatever.
Eurogamer: You mentioned earlier that you're talking to people in the film business. Is there still a Half-Life film project?
Gabe Newell: No, there's no film project in the works right now. The biggest problem was the script. There were a huge number of really bad scripts that were produced. It was easy to look at them and say that these were movies that shouldn't get made. There's no point in making a bad Half-Life movie. The world is full of bad movies and we didn't need to help make another one.
It's pretty easy to say that until we see something on the script side. The script is just the beginning, but if the script is broken there's no reason to go hire a director and get a project greenlit if you look at the script and you say, 'I've seen this movie before and it was terrible the first ten times'. We're not going to do a Half-Life movie until the movie would be as interesting a movie as the game was a game. That's sort of been the challenge. Other than that, just doing a movie for its own sake doesn't make a lot of sense.
Eurogamer: Given how much importance you place on user feedback, I expect you've read pretty much everything that's been written online about Half-Life 2, but what did you think of it? Do you think you deserved all those 10/10s, for instance?
Gabe Newell: Anybody who works on a game has a totally different relationship to somebody who's playing it. I still haven't been able to play Half-Life as a gamer, I still play it as a person who looks at all of the defects because that's just the mindset you get into; when you build a game you're constantly exaggerating what's wrong and ignoring what's right about a game.
Eurogamer: That's probably true of every kind of creative process.
Gabe Newell: Yep. I'm sure that when you look at a piece of your writing...
Eurogamer: I think they're all awful.
Gabe Newell: And that's what helps make you better, right? Focusing on what's good about something isn't nearly as productive as finding the things that are wrong and then fixing as many of those as you can. Everything's sort of grist for the mill, right? Everything's a process. Say I get an email that says 'f*** you, f*** you, you die'. I reply and say, well, and it's surprising how often you get to a useful point. Sometimes you'll just find out that...
Eurogamer: They're unhinged?
Gabe Newell: Actually we really very rarely... you know, it's the Internet right? People assume I don't read my email, and assume that there's some robot I guess somewhere who reads my email and filters it or something, so if you just reply and say 'what's bothering you' sometimes you just find that their account got hijacked and they're mad at us, they're just mad, and I say 'hey, we can fix that' and they go 'really?' Then we can say 'and hey, here's the IP that your account was hijacked from' and they go 'oh, okay - that was my cousin'.
Eurogamer: He's in trouble.
Gabe Newell: He's in trouble now! So you know, it's all grist, whether it's a review, or emails or whatever, it's usually just helpful in the process of making things better the next time.