In October, Valve employees and alumni gathered to celebrate the 25th anniversary of Half-Life, Valve’s first bestselling game released in 1996. Half-Life quickly put Valve on the map, selling 2.5 million copies within a year. Despite Valve’s subsequent success with games like Portal and Dota 2 and the growth of its digital sales platform, Steam, Half-Life remains core to the company’s identity. Gabe Newell, Valve’s co-founder and president, who is worth an estimated $9.5 billion and owns an estimated 50.1% of the company, has become increasingly reclusive, living on one of his five ships since the pandemic.
Valve has sustained over a 40% operating profit margin for the past decade and has been more profitable per employee than companies like Amazon and Microsoft. Last year, Valve had its best year ever, with an estimated $5 billion in revenues and about 350 employees. Steam, Valve’s game distribution platform, has dominated the market for the past 19 years, with an estimated 75% global market share. Steam contributes an estimated $3 billion to Valve’s top line, or about 60% of its 2023 revenue, and is growing rapidly.
Valve broke into the hardware side of the business with the launch of the Steam Deck in 2022, a console that can play PC games and sold nearly half a billion dollars’ worth in its first year. Despite Valve’s success, it has faced criticism and lawsuits for its 30% cut of sales on Steam, with rival Epic Games Store taking a friendlier 12% cut. Valve is currently facing lawsuits alleging anticompetitive behavior and overcharging users, but it continues to attract developers and publishers due to its large audience.
Gabe Newell, a Harvard dropout and former Microsoft executive, co-founded Valve with Mike Harrington in 1996. Newell’s strategic decisions, including launching Steam and focusing on multiplayer games like Counter-Strike 2 and Dota 2, have propelled Valve to success. Valve has also explored hardware ventures like the Steam Machines and virtual reality headsets, along with releasing the prequel Half-Life: Alyx in 2020. Newell is now spending more time on personal projects like Starfish Neuroscience and Inkfish, focusing on neural interfaces and maritime research.
Despite Newell’s reduced involvement at Valve, the company continues to thrive due to its dominance in the gaming market. Valve’s success with Steam and hardware ventures has solidified its position as a leading player in the industry. While facing criticism and lawsuits, Valve remains a key player in the gaming world, with a legacy built on innovation and success.
