There’s a fun part of the theories we have about space-time that suggests that if you remove one building block in your timeline, even if it’s someone really important like Hitler, that the universe will simply make another person assume the same roles in order to keep the timeline constant and flowing. In a similar vein, if Valve hadn’t popped up when it did, there would be another company that would have likely taken its place, though not in exactly the same form as it is today. It’s difficult to imagine life as a gamer without Valve, or jokes about cake and Valve Time, or even remember fondly what PC gaming was like before Steam (we had MUCH shorter backlogs, that I can assure you). The company today celebrates its 20th birthday, having been officially formed on 24 August 1996. They’ve had a 20-year streak of independence as a software developer, and more than a decade of crushing dominance when it comes to online game sales.
The company was formed with two friends, Gabe Newell and Mike Harrington, following in the foot of fellow colleague Michael Abrash, in their decision to leave their day jobs as developers working for Microsoft Corporation and work in the videogame industry. By that time, both Newell and Harrington had amassed enough savings to retire in comfort before they were even middle-aged, all thanks to the constant surges in popularity sales in Microsoft’s software saw during the 80’s. Both worked on important projects for Microsoft’s software division – Newell had his hand in Windows 1.01, 1.02, and 1.03, while Harrington was on the team developing Windows NT. Newell and Harrington used their private funds to start up Valve L.L.C in 1996, and through their friendship with Abrash were also able to secure a license to the Quake engine, to develop Half-Life.
Two years later, the game was completed and launched on 19 November 1998. During that same year, Valve bought out TF Software, the studio that created the Team Fortress mod for Quake, with the intention of turning Team Fortress into its own franchise. Following the launch of Half-Life, Valve contracted Gearbox Software to make expansion packs for the game, with the studio being responsible for Half-Life: Opposing Force and Half-Life: Blue Shift. Included in the deal were also Half-Life ports to the SEGA Dreamcast and Sony PlayStation 2 consoles, along with Half-Life: Decay on the latter console, which added split-screen co-op.
Over the years, Valve released several in-house titles and bought out indie studios who had worked on mods for popular games that eventually became a Valve brand, including Portal, Counter-Strike, Left 4 Dead, and Day of Defeat. During development of Half-Life 2, Newell worked in secret with a small team on the Steam client, intending for it to launch with the game and become a distribution platform for patches. Steam first saw action as part of the Counter-Strike 1.6 beta release, which was intended to test the server infrastructure, in 2003. Half-Life 2 launched on 16 November 2004, and was the first game that required Steam to be installed by default.
Cue the many, many memes over the next decade about Steam’s updater being a fickle, whiny little runt with the temperament of a minorly wounded Snorlax (yes, kids, Pokémon was a thing then), able to wipe your download update process if you so much as hovered your mouse near its border window, or sneezed on your network cable. Updating Half-Life 2 on a 64k dial-up modem was not fun, I guarantee you. Being unable to run the game acceptably because your GeForce 440MX AGP somehow didn’t support the new shader models very well was even less fun.
But those issues eventually got fixed, and Valve was on its way to their first ever distribution deal in 2005, partnering with Strategy First, a Canadian studio that developed and published titles such as the Jagged Alliance series, O.R.B: Off-World Resource Base, and the Space Empires series. The first third-party game to ever be sold on Steam was Rag Doll Kung Fu in October 2005 – technically Media Molecule’s first game, before the studio ever existed.
It’s been all uphill from there. That distribution deal in 2005 set Valve up for life – waves of indie studios and sizeable publishers stepped up to take up Valve’s offer to appear on their storefront, and their distribution network became so large that it became necessary to set up infrastructure worldwide to accommodate the ever-increasing bandwidth requirements of games and gamers. Valve’s bandwidth stats today make up a little more than 2% of total throughput in the United States, putting it in the top ten companies in the U.S. consuming bandwidth – at peak times during the past week, Valve globally consumed 3.5Terabits per second of bandwidth.
Aside from the endearment from the gaming community that the Half-Life franchise has earned Valve, it’s also become the custodian of some of the world’s biggest professional gaming tournaments, including The DOTA 2 International as well as the Counter-Strike: Global Offensive majors held around the world. DOTA 2 remains the studio’s most played game to date, and has basically never seen a drop in the number of players over the course of a full year. Like a cult, it keeps on inducting more victims that always choose to return after a failed hiatus.
Valve also bears the responsibility of helping shape the Linux gaming community, offering gamers the chance to play games on Linux-based operating systems through SteamOS and a native Linux port of the Steam client. Then there’s the small meta-games within the Steam client itself – the collectable trading cards and items you earn from doing various things in the community, as well as the marketplace where you can actually find ways to pay for new games just by trading items. People actually can get somewhat rich off this, and Valve’s terms for using the Steam store indicate that if you’re a U.S. citizen, and make more than 100 sales of cards in a year, you have to register your trading action with the IRS because of how much money can be made off the market.
From a frustrating technical requirement for a 2004 game, to the monstrous hydra of 2016, Valve has evolved into something that no-one thought possible. They make a pretty sweet gaming controller for the PC and SteamOS platforms, they’re introducing game streaming to the home network, and they’re pushing the VR headset industry by publishing an open API for games sold on the Steam store, as well as partnering with HTC to make VR technology cheap and easily implemented. Going through every single achievement Valve has been awarded, as well as everything they’ve ever done for the gaming community, would yield a list long enough to take over the front page of NAG.
It’s rare for a gaming company to have as much of an impact on the market as Valve has enjoyed these past years, but they’re slowly starting to see competition in the online distribution space, with competitors popping up everywhere. Other companies are starting to realise the value in having their own consumer-facing storefront, and even more are realising the tremendous impact that games have over the entertainment industry, as well as consumer technology adoption. The only company or game studio that has actually mimicked, and achieved, some of Valve’s success is CD Projekt, but even then it’s practically impossible for anyone to catch up now – they’re too big, too far ahead, and shoulder so much responsibility because they’ve held a monopoly on game distribution for so long.
As the company celebrates 20 years in the industry, we’re all left to wonder where the next ten years will take them. Can they really not count to 3? Will they put more energy into SteamOS and Linux gaming? How will they extend VR capabilities beyond what’s possible in the Steam API? What will they do when Gaben resigns? Can their flat management structure still work? Will Steam branch out into Android sales? They definitely have a war chest filled with so much money that they could conceivably buy a small country, so they have enough funds to do anything they set their minds do.
It’s going to be an interesting space to watch! Happy Birthday Valve. Now celebrate by giving us free trading cards!