Near-billionaire Gabe Newell discusses his privately held developer's finances with Forbes; Steam controls 50 to 70 percent of PC online market.
Gabe Newell is a rich man. Just how rich? According to a recent article in Forbes magazine, he owns over half the company he cofounded, Valve Software, which is estimated to be worth between $2 billion and $4 billion. That valuation pegs him as a member of the billionaires' club--or, conservatively, at least puts him close to it.
The key to Newell's success is Half-Life, Left 4 Dead, and Portal developer Valve, which has shown rapid growth in recent years. Last October, the company predicted 200 percent year-over-year growth, thanks in large part to its Steam online service. Speaking with the magazine, Newell said his company is, per employee, more profitable than Apple or Google.
According to Forbes, Steam controls half to 70 percent of the $4 billion market for downloadable PC games, thanks to the service's ease of use and mod-friendly features. It further explained Steam's success by outlining the company's profit sharing with publishers. At retail, publishers get 30 percent gross margin--on Steam, they get 70 percent.
Forbes' article also touched on Newell's battle with Fuchs' dystrophy, a congenital eye disease that eats away at the cornea. Newell eventually had cornea transplants in 2006 and 2007, which fixed his eyesight and gave him a new outlook on life--literally.
"The thing that snuck past my defenses was that not only could I see again but I could see better than I ever had before," he said. "I felt like I was in a fantasy story. It reminded me of how fast the future is coming at us and from what unexpected directions."
@KrazzyDJ , that is not a good idea. Valve is a good video game developer right now... So was EA and Activision a couple of years ago, and Ubisoft is also following in their path... Honestly, if you want the best for the video game industry, buy from all sorts of different publishers, not just 2 or 3... Thats how video games become crap, sort of like how games used to be really good like Call of Duty, Need For Speed, Splinter Cell, Super Mario, Tony Hawk, and Assassins Creed. If you keep buying everything Valve releases, I 100% guarantee that they will follow Activion's, EA'S, Ubisoft's, Nintendo's and more footsteps. Although, since some might take this "Anti-Valve" I can easily see this comment becoming -20...
let me tell you some thing, this men has opening mind where we could see a true employer who try to make the difference in the games market
Any genius behind Steam deserves all this recognition. Valve has really given PC gaming another boost with such an excellent portal for digital distribution.That and the rich modding community has made sure that PC gaming will last even if it suffers from some other worrying issues. Also since this is a mandatory line for every HL fan : "Come on and make HL3 already" :P
ok, since you are VERY rich, can you make the next half life already? i'll be better than all that "call of duty" crap, even a perfect 10 on every website
Valve Software really served well to gaming industry since they've founded. they're deserving every cent of money that they've earned. Keep going Valve!!!
@Dominicobaggio There's a flip-side to that coin. Steam exists, in part, because the PC gaming market was considered dying by many analysts roughly 10 years ago and its been limping on since. Aside from The Sims, sales were consistently weak. This puts PC games directly available to consumers straight from their homes and combats piracy by offering discounted prices. So this only helps the PC gaming market and thus preserves and potentially creates jobs as well.
Steam is a great idea, PC gaming is dying and we need companies like these to give us major discounts on our games lol. There is not much money making anymore with most types of PC games (MMO's and RTS are the exception). You can load up a website, find the game you want and download it illegally and easily start playing it, all for free...... Thats why you see games such as Fallout New Vegas selling for £19.99 from the start (unlike the full price on consoles). PC games arent selling anymore. The only way to sell them nowadays is cheaply via online legal download services. Notice that Steam always have discounts going and for new games too. I wouldnt have 30+ games on my steam if it wasnt for the under £10 games. Not only that, hardware is getting really expensive during the recession and after the global recession. I cant afford to keep buying pieces of equipment over £50 just to play the latest game.
I know i will get thumbs down for this but this is why the world is dying. When i was young i bought my pc games from a local guy running his own shop. Now its this company with few employees doing all the selling cutting out literally thousands of jobs. "Per employee more profitable than apple or google" in otherwords few employees, massive profits. The top 2% get richer and the guys who were feeding their familes with their local shops now sign on. Thumb me down now i dont care lol
At least they still have the gamers of old at heart and know how to make a good coop or that lovely Team Fortress ^.^ nam nam nam nam
It wouldn't be wrong to say that Valve is one of the more respected gaming developers around. And in today's age filled with the EAs and the Activisions, that matters a lot. We should continue supporting Valve by buying their games !!!
It's both good and bad sort of way that Steam trickles down more money but I doubt that publishers are going to give it too much to developers. If their golden goose get fed too well, they might not need the middleman with this whole downloadable market and think that "Steam handles the distribution". My point is that it would be nice to see numbers compared how much of the money goes to the developers too with both of these percentages.
Valve is great and has great games they just need some better customer support i would think with all that money they could have people that you could call but all there customer support is through email which is my only problem.
Valve and Steam have continued to show that there is still a market for PC gaming. For that I must commend them. And because they saw the market, it grew around them. That's why they are so dominant. Certainly others are now shaping up for a slice, which I think is good too. More competition equals more reasonable prices.
Yep, Gabe and the folks over at Steam are petty much the sole reason why PC gaming isn't extinct in this console dominant era. It's about time they started getting some recognition for what their doing for the PC gaming community. However, I do hate the fact this publicity is only because of $$$
Google & Apple employ tens of thousands of employees. Valve has like 250 employees. When you take into consideration alot of the G&A employees are janitors, interns, temp workers, etc. They employ tons of average salary workers which is going to bring the profit per employee down significantly.
Valve has been performing on the market very well for quite a while. People still buy valves games, and steams DRM on valve developed games only restricts a person to a steam account instead of curtain amount of installs. As for apple I could see a decline a shales in their handheld devices, I think their computer/software sales would increase bit by bit. Still people go for the windows OS, so I don't think game sales for windows gaming will disappear for 10 years at least. Though right now Apple has more money right now.
Any game developer which is as loyal and true to the PC gaming platform is a friend to me. Valve are currently up there on my top spot for awesome gaming companies.
naturally! you don't just make the greatest online shooters ever crafted and not make a little cash on the way! valve is by far the most prestigious and talented game developer out there, every game they make just amazes me, even the mod community makes mind-blowing things! @nore105 apparently valve has stated that the don't think that they'll ever "sell out" to shareholders because it would limit their control to just making games the share-holders want or something along those lines, you'd have to Google it to get the whole story.
The reason Valve are so successful is that they control the pace a game is developed. If it's not going well they give it more time. They have total ownership, total control and pride themselves in only releasing games which are ready. Activision do not write games, they hire studios to do it for them and therefore their only goal is to make as much profit as possible. They put too much pressure on studios and force them to release games without adequate testing and refinement. If a game flops they then blame the studio, hire another one and carry on regardless. Everyone whinges about it but everyone keeps buying their games! I haven't played on PC in years now, but I can still remember the Valve splash-screen and moody music as Half-life booted, good times...
I just hope all the greedy money grubbers stay out of Steam's way. Lots of retailers are mad that they can't sell PC games at their physical stores and other companies insist that Steam is a monopoly. The way I see it is that Steam is just the best out there. There is Direct2Drive, Games for Windows, Onlive, etc. None of them provide as good of a service. They don't really seem to be involved in much vendor lock-in either. If you buy a game through Steam, you don't really lose it unless you are too stubborn to run the Steam program. There don't seem to be any other things tying you to their platform. They're not a monopoly, other companies are just jealous.
While there are some minor quibbles with Steam, I think their service is great. Plus, even if they went under (in like 20 years) I think they have things in place to ensure you don't lose your games. Hearing this made me even happier about Steam. If you can stay private and get buy without selling part of your company to shareholders who don't care about anything but more money (publicly traded), then that seems like the absolute best way to do it. I'm glad that Valve is a private company. I can't imagine what it would be like if a bunch of rich stock market elites were running it. It definitely wouldn't resemble the great service it is now.
Steam brought me back into the PC-gaming fold. Now that GameStop/EBGames and Wal-Mart have virtually given up on selling PC games, there's only the slim pickings at Target in my area for retail purchases. Not only does Steam have a huge library, they have great sales too. Steam + GameTap make up the bulk of my PC gaming these days. I appreciate Steam's additions of achievements and cloud storage for many games too.
This is great news. They haven't made a bad game yet. Half-Life is still one of my favorite games of all time.
@grigjd3 The definition of an "Independent video game development" is the process of creating video games without the financial support of a video game publisher. So would you say that Valve does not meet the criteria of this, because of the amount earned?. Serious question.
The Automatic involuntary updates are brutal if you mod titles your self. Baring that, Steam is a fine service. I really like the overlay they use so you can talk to friends inside games. Direct to Drive is just as good, without the hand holding. GamersGate is excellent for finding obscure European titles. They all have their place....and their sales!
i havnt tried steam, but i dont play PC games much (rubbish pc, no money to upgrade :( ) but good news for them and the industry anyway
You can't hate a company that seems to understand gamers. They give us free games, huge sales all the time, buy a game on PC get it on Mac for free, free updates and game add-ons etc etc. The service is easy to use, has Steam cloud (saves all you game settings) great customer support and the DRM doesn't try to take over your whole computer. I don't see how any PC gamer would not have Steam installed or at the very least a Steam account.
Overall Steam is a really great service. They make mistakes but when they make mistakes, they make amends. Gabe Newell knows how to run a business. @TheDreamSeeker, while I agree Valve in quite talented (in ways many are not), I think it's really hard to call Valve independent when they're worth over two billion. Seriously, that's kind of mainstream.
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