[Music]
hello everybody Tom Ellsworth here and
welcome back to case studies with the
biz doc today we’re gonna look at the
origins of the game studio valve and
their classic game half-life you know
there’s a lot of things you can learn
from them and one of the things I learn
is listen to the audience and you ask
for a case study on gaming someday maybe
we’ll do something on riot cuz a couple
of you asked about riot and all that the
gaming tournaments everything they’re
doing at Madison Square Garden but today
we’re gonna go back to the origins of PC
gaming and at the fining moment in PC
gaming that I’m sure all you remember
and we’re gonna look at what made valve
and what made half-life and how they
change the playing field for everyone
and today there’s gonna be three things
we’re gonna learn along the way point
one passion is indispensable if you
don’t have passion for the sector you’re
diving into you don’t have anything to
start with you don’t have a start second
when entering a sector you need to
network with everybody and know
everything there is to know about that
sector if it’s a sector you’re
passionate about learn everything as a
quick aside I was once at UCLA on a
panel with Mark Cuban and somebody said
hey I love this and I love that and I
want to dive into it and Mark said stop
until you know everything about that
sector why they make money how they make
money who the big players are how they
got there what they do and why it’s that
way today if you don’t know all of that
and know it cold and be the smartest guy
in the room when you enter the sector
cuz your research don’t enter the sector
third listen if your product is late
it’s late only till the day it’s
released then it’s out and rolling but
if it sucks it’ll suck forever so always
put out product that’s great so let’s
dive into valve shall we so Gabe Newell
Mike Harrington were early guys at
Microsoft they had made some money on
because Microsoft was in its heyday and
they were their programming windows and
other things but they had a passion and
the passion was to create a gaming
company now they knew a lot about
software but they had never built gaming
software so they knew they had to go
figure some things out
so with this wealth and this passion
they went out to get knowledge and along
the way they get connected to John
Carmack John Carmack is one of the
legends of it the makers of doom and
quake and he recommended to them why
don’t you take the quake engine and
follow your passion to build a game but
build it on the quake engine that way
you don’t have to build an engine you
can build your narrative your story arch
your character
everything you should putting together
build on on the engine it’ll save a
couple steps and they were very excited
about this and said you know what I
think we’re gonna do that so they built
the company and they were signing
documents and getting it all together
and has story goes those documents were
actually signed on the day of Newell’s
wedding imagine that was popular with
the bride but nonetheless the company
was born shortly thereafter the name
valve came out of it they had a couple
other names that they had messed around
with like I think it was like Star Rhino
and some other things but valve they had
opened the valve on creativity and
that’s just such a strong strong name
for the company I think well there you
have a company legally born and they’ve
got the quake engine so where do they go
from here
they had this financial freedom to do
what they wanted and rather than sail
around the world they really wanted to
build a company that gave the culture
and gave the feeling for a place that
they would want to work so I imagine
that that is something that we all can
learn that when you build the company
whatever you’re doing you build the
place that you like to work at and you
follow your passion for that and I think
that’s probably an important little mini
learning that we have along the way here
nonetheless they went out to hire a team
and they didn’t just hire experienced
gamers they hired people that were
creative and they figured that they
would teach them along the way and kind
of inculcate them into the the what was
going to be the culture of valve next up
was to find a publisher
now in the gaming world a publisher is
similar to a book publisher or a record
label a band needs to find a record
label an aspiring author needs to find a
book publisher well guess what a game
studio has to find a publisher that’s
gonna take you to market market it have
relationships with all the various
stores to get you on the Shelf so you
need each other just like music or books
so they go out to find a publisher well
game publishers are a little wary of
game studios because game studios are
run by gamers gamers are passionate
about the software passionate about the
game and absolutely famous for being
late they’re equally famous for being
finicky and tough to work with so when
you’re signing a first-time studio to a
publishing deal you got to know what you
got and you got to be careful with it so
usually publishers are hard to break
into for gamers with an idea and Lord
knows there’s tons of gamers out that
out there with that idea that was gonna
be the next quake or the next EverQuest
nonetheless Sierra online actually signs
him to a deal
even though gamers are famous for being
finicky and famous for being late yeah
hey Paul when you were working and doing
the facial animation stuff for Rockstar
were they ever late there it is if the
games on time it probably sucks because
they’re spending all the time being late
making the game grey ladies and
gentlemen welcome to the world of games
and that was one of the things that
Sierra online was concerned about so
they only signed them to a one game deal
okay let’s see we can do this half-life
thing and we’ll see where it goes and
let’s figure this out so see your online
signs them but they hedge their bed a
little bit they only gave them a one
game deal because they’re a brand-new
studio and they don’t know much about
them but you’re always taking a risk if
you think about like in terms of music
if you’re a record label and you signed
magic to one album you probably made a
smart decision because they never backed
up rude however if you sign dear hundred
or one album you screwed up because
they’re a free agent after that first
album and they’re going to get signed by
somebody else so you always have
risk and signing a game studio just like
signing a musician you just never know
what you got nonetheless Sarah online
takes the the guys from valve and
half-life in 1997 in the in May of the
year to e3 and there is no bigger confab
for gamers than May of every year III in
Los Angeles the Electronic Entertainment
Expo and there they go
and the response to half-life was
tremendous people around the show have
you seen that have you seen that go over
to Sierra online and see that they knew
they had a hit but they also knew they
had a new studio that had never actually
done what we call shipped product and
that would be a correct assumption in
the fall of the year valve would say you
know it’s not ready yet and we’re not
gonna ship it in the meanwhile Sarah
online it already started marketing so
they’ve already started marketing for
this and the only thing that held this
relationship together that kept Sarah
online from tearing up the contract was
because they knew that they had a great
game because they saw all the response
that they had gotten at e3 and they saw
the response that the critics have they
said that’s different that’s new that’s
gonna be outrageous so away we go and
valve decides to do more than just
deliver a game late
they actually throw away some of the
code and they recode part of the game
why because they’re passionate about a
perfect product and they have been
learning things along the way and
learning things about what they could do
with the quake engine and make it better
and make it ever more perfect so here we
go into 1998 after Sierra online has the
heart attack of the holiday selling
season of 1997 because they had no game
to put out there and they had to pull
all their marketing back and it’s gonna
be out in the spring of 1998 whether way
I mean the summer of 98 wait wait I mean
the fall of 1998 and all of a sudden
it’s November of 1998 and then the
internet took over and let me tell you a
little Side Story many of you may not
remember this but between 1994 and 1996
there was two browsers out there first
was mosaic Brown
which led to the netscape browser well
at that time the internet was still kind
of a baby but the browser gave us all
this ability to go farther and do more
faster on the internet the internet was
also largely geeky and techie at the
time just like gamers were geeky and
techie now why am I telling you this
well it’s important and here’s why right
before the release of half-life finally
really going to come out in November
there’s a leak on the Internet of a
version of the game and everybody gets
to look at it and the techy community
who’s using these early browsers to make
use of the Internet they see it and they
go nuts and the rumors go nuts
and you know what it was more hype in
launch marketing than a marketing staff
could ever dream of the hype was
unbelievable and when the game came out
in November and everybody got to see it
live it was stupendous it blew the lid
off and it was the game of the year one
of the things that really made it
special was the perspective of the
first-person shooter you were going
through the game with the perspective of
the main character and you were doing
things in that perspective so rather
than react to what would happen at the
game like pac-man you had to keep
following the dots you just reacted to
where the dots you would make your
decisions on doing this or doing that
and you traveled through the game as the
character and as the shooter and that
was that was a revelation and the way
that they pulled it off the way that
Valve put together all of the elements
of it and by the way if you remember the
game as you would go through something
you would look over to the left or the
right and suddenly out of nowhere this
monster would come in like eat one of
your coworkers
you know it’s just amazing those kind of
things made it what it was but it was
your perspective and you could go back
and replay it was amazing it was so
successful that they decided to
introduce expansion packs and they
retained a separate company actually a
separate studio gearbox and they made
expansion packs called the posing force
and blueshift what was interesting about
opposing force and blueshift
if both of those are actually scientific
terms one was for the Doppler effect and
one was for ya physics
you know physics rationale our physics
were all opposing force but essentially
the same story arc unfolded with those
two expansion packs but from the
perspective of a different character so
now you could go through the game again
but this time through this character and
this time through this character and
that introduces this the whole notion of
expansion Paks was tremendous it allowed
people to experience the game in
different ways it also allowed coders to
go in and make their own updates using
the engine called mods and the modding
community is it would be called embraced
it and the result was not only mods but
completely new standalone games if you
think back to the origins of these guys
right from Microsoft Microsoft Windows
is like a platformer that sure they had
their own products like Excel and word
and things like that but they also
allowed you with Microsoft Windows to
make other things that you thought would
be interesting on the platform of
Windows well likewise the mods on the
platform of half-life it was like an
open environment where you were invited
to come in and build something using the
framework
unlike music where when it’s done it’s a
closed thing and it’s finished and if we
know anything about the history music
people made mods based on music they
were called rap songs and they would
sample things about songs from years
gone by and there would be lawsuits
hey man you stole part of my work and
you’re doing it because music was a
closed and finished environment the
gaming community it couraged expression
and creating mods that was a pioneering
difference in what you did with the
finished artwork and so now you also
have this interesting thing is the quake
engine that led to valve in the building
of half-life now half why it had an
engine that was leading to mods that
were just
you know what I think was most
interesting about it was if you think
about the mods back in those days you
know day of defeat was set in World War
two and I really like that mod I really
wasn’t into half-life but the day of
defeat came out I did play day of defeat
the World War 2 mod on half-life but
other people were completely into a
thing called counter-strike
counter-strike would lead to a series of
mods which would also lead to valve
actually recruiting and bringing the
entire counter-strike creative team on
board and then standalone products so it
shows you that look at the smarts of
that it actually leads to somebody
coming in that would be like van Halen
inviting people to come in and create
music based on Eddie Van Halen’s riffs
then they create their own stuff and
then van Halen invites them into the
band and builds albums that van Halen
owns as you can see it just doesn’t
happen at other creative mediums but it
certainly did in the gaming medium and
it certainly did with half-life
what started as a quake engine was now
its own engine and spawning things and
it was just absolute success story what
was interesting is there be one more
page in the chapter here valve would go
on to create steam and steam was a
complete digital distribution platform
that had digital rights management had
multiplayer gaming and social elements
so guess what learning from their roots
they created sort of the Microsoft
Windows of gaming called steam and that
my friend is the story of valve and
half-life taking an engine from mid
their Microsoft roots all the way
through the success of half-life and
it’s mods ultimately resulting in a
platform called steam as I wrap up let’s
go back to those three points I
mentioned first passion is indispensable
and we can see how even though the valve
guys were software guys and not gaming
guys they had a passion for gaming and
they would take that forward second when
you enter a sector know what you know
everything you can possibly know about
it and go learn from people they learn
from
karmak and even got the suggestion to
use his quake engine as the heart and
the original seed of their launch and
then third if you remember if your
products late it’s only late for a short
time but if it sucks it’s gonna suck
forever and valve refused to put out a
product in 1997 that they didn’t think
was great
instead by November of 1998 they had
actually rebuilt part of it their
passion in tow and they put out a
product that was great and changed the
PC gaming industry and I think we can
learn things from that whether you’re
running a small company in Indianapolis
Indiana or you’re building what you hope
to be a huge gaming company these
lessons I think apply to you
and for that that’s our case study for
today and we have Paul boom all right
good toss this time thank you for
watching case studies with the biz doc
here on value tainment please subscribe
because we’re on a mission thanks to you
to hit a million subscribers by the end
of the year and until next time in
another case study I’m Tom Ellsworth I
hope I left you better than I found you [Music]
hello everybody Tom Ellsworth here and
welcome back to case studies with the
biz doc today we’re gonna look at the
origins of the game studio valve and
their classic game half-life you know
there’s a lot of things you can learn
from them and one of the things I learn
is listen to the audience and you ask
for a case study on gaming someday maybe
we’ll do something on riot cuz a couple
of you asked about riot and all that the
gaming tournaments everything they’re
doing at Madison Square Garden but today
we’re gonna go back to the origins of PC
gaming and at the fining moment in PC
gaming that I’m sure all you remember
and we’re gonna look at what made valve
and what made half-life and how they
change the playing field for everyone
and today there’s gonna be three things
we’re gonna learn along the way point
one passion is indispensable if you
don’t have passion for the sector you’re
diving into you don’t have anything to
start with you don’t have a start second
when entering a sector you need to
network with everybody and know
everything there is to know about that
sector if it’s a sector you’re
passionate about learn everything as a
quick aside I was once at UCLA on a
panel with Mark Cuban and somebody said
hey I love this and I love that and I
want to dive into it and Mark said stop
until you know everything about that
sector why they make money how they make
money who the big players are how they
got there what they do and why it’s that
way today if you don’t know all of that
and know it cold and be the smartest guy
in the room when you enter the sector
cuz your research don’t enter the sector
third listen if your product is late
it’s late only till the day it’s
released then it’s out and rolling but
if it sucks it’ll suck forever so always
put out product that’s great so let’s
dive into valve shall we so Gabe Newell
Mike Harrington were early guys at
Microsoft they had made some money on
because Microsoft was in its heyday and
they were their programming windows and
other things but they had a passion and
the passion was to create a gaming
company now they knew a lot about
software but they had never built gaming
software so they knew they had to go
figure some things out
so with this wealth and this passion
they went out to get knowledge and along
the way they get connected to John
Carmack John Carmack is one of the
legends of it the makers of doom and
quake and he recommended to them why
don’t you take the quake engine and
follow your passion to build a game but
build it on the quake engine that way
you don’t have to build an engine you
can build your narrative your story arch
your character
everything you should putting together
build on on the engine it’ll save a
couple steps and they were very excited
about this and said you know what I
think we’re gonna do that so they built
the company and they were signing
documents and getting it all together
and has story goes those documents were
actually signed on the day of Newell’s
wedding imagine that was popular with
the bride but nonetheless the company
was born shortly thereafter the name
valve came out of it they had a couple
other names that they had messed around
with like I think it was like Star Rhino
and some other things but valve they had
opened the valve on creativity and
that’s just such a strong strong name
for the company I think well there you
have a company legally born and they’ve
got the quake engine so where do they go
from here
they had this financial freedom to do
what they wanted and rather than sail
around the world they really wanted to
build a company that gave the culture
and gave the feeling for a place that
they would want to work so I imagine
that that is something that we all can
learn that when you build the company
whatever you’re doing you build the
place that you like to work at and you
follow your passion for that and I think
that’s probably an important little mini
learning that we have along the way here
nonetheless they went out to hire a team
and they didn’t just hire experienced
gamers they hired people that were
creative and they figured that they
would teach them along the way and kind
of inculcate them into the the what was
going to be the culture of valve next up
was to find a publisher
now in the gaming world a publisher is
similar to a book publisher or a record
label a band needs to find a record
label an aspiring author needs to find a
book publisher well guess what a game
studio has to find a publisher that’s
gonna take you to market market it have
relationships with all the various
stores to get you on the Shelf so you
need each other just like music or books
so they go out to find a publisher well
game publishers are a little wary of
game studios because game studios are
run by gamers gamers are passionate
about the software passionate about the
game and absolutely famous for being
late they’re equally famous for being
finicky and tough to work with so when
you’re signing a first-time studio to a
publishing deal you got to know what you
got and you got to be careful with it so
usually publishers are hard to break
into for gamers with an idea and Lord
knows there’s tons of gamers out that
out there with that idea that was gonna
be the next quake or the next EverQuest
nonetheless Sierra online actually signs
him to a deal
even though gamers are famous for being
finicky and famous for being late yeah
hey Paul when you were working and doing
the facial animation stuff for Rockstar
were they ever late there it is if the
games on time it probably sucks because
they’re spending all the time being late
making the game grey ladies and
gentlemen welcome to the world of games
and that was one of the things that
Sierra online was concerned about so
they only signed them to a one game deal
okay let’s see we can do this half-life
thing and we’ll see where it goes and
let’s figure this out so see your online
signs them but they hedge their bed a
little bit they only gave them a one
game deal because they’re a brand-new
studio and they don’t know much about
them but you’re always taking a risk if
you think about like in terms of music
if you’re a record label and you signed
magic to one album you probably made a
smart decision because they never backed
up rude however if you sign dear hundred
or one album you screwed up because
they’re a free agent after that first
album and they’re going to get signed by
somebody else so you always have
risk and signing a game studio just like
signing a musician you just never know
what you got nonetheless Sarah online
takes the the guys from valve and
half-life in 1997 in the in May of the
year to e3 and there is no bigger confab
for gamers than May of every year III in
Los Angeles the Electronic Entertainment
Expo and there they go
and the response to half-life was
tremendous people around the show have
you seen that have you seen that go over
to Sierra online and see that they knew
they had a hit but they also knew they
had a new studio that had never actually
done what we call shipped product and
that would be a correct assumption in
the fall of the year valve would say you
know it’s not ready yet and we’re not
gonna ship it in the meanwhile Sarah
online it already started marketing so
they’ve already started marketing for
this and the only thing that held this
relationship together that kept Sarah
online from tearing up the contract was
because they knew that they had a great
game because they saw all the response
that they had gotten at e3 and they saw
the response that the critics have they
said that’s different that’s new that’s
gonna be outrageous so away we go and
valve decides to do more than just
deliver a game late
they actually throw away some of the
code and they recode part of the game
why because they’re passionate about a
perfect product and they have been
learning things along the way and
learning things about what they could do
with the quake engine and make it better
and make it ever more perfect so here we
go into 1998 after Sierra online has the
heart attack of the holiday selling
season of 1997 because they had no game
to put out there and they had to pull
all their marketing back and it’s gonna
be out in the spring of 1998 whether way
I mean the summer of 98 wait wait I mean
the fall of 1998 and all of a sudden
it’s November of 1998 and then the
internet took over and let me tell you a
little Side Story many of you may not
remember this but between 1994 and 1996
there was two browsers out there first
was mosaic Brown
which led to the netscape browser well
at that time the internet was still kind
of a baby but the browser gave us all
this ability to go farther and do more
faster on the internet the internet was
also largely geeky and techie at the
time just like gamers were geeky and
techie now why am I telling you this
well it’s important and here’s why right
before the release of half-life finally
really going to come out in November
there’s a leak on the Internet of a
version of the game and everybody gets
to look at it and the techy community
who’s using these early browsers to make
use of the Internet they see it and they
go nuts and the rumors go nuts
and you know what it was more hype in
launch marketing than a marketing staff
could ever dream of the hype was
unbelievable and when the game came out
in November and everybody got to see it
live it was stupendous it blew the lid
off and it was the game of the year one
of the things that really made it
special was the perspective of the
first-person shooter you were going
through the game with the perspective of
the main character and you were doing
things in that perspective so rather
than react to what would happen at the
game like pac-man you had to keep
following the dots you just reacted to
where the dots you would make your
decisions on doing this or doing that
and you traveled through the game as the
character and as the shooter and that
was that was a revelation and the way
that they pulled it off the way that
Valve put together all of the elements
of it and by the way if you remember the
game as you would go through something
you would look over to the left or the
right and suddenly out of nowhere this
monster would come in like eat one of
your coworkers
you know it’s just amazing those kind of
things made it what it was but it was
your perspective and you could go back
and replay it was amazing it was so
successful that they decided to
introduce expansion packs and they
retained a separate company actually a
separate studio gearbox and they made
expansion packs called the posing force
and blueshift what was interesting about
opposing force and blueshift
if both of those are actually scientific
terms one was for the Doppler effect and
one was for ya physics
you know physics rationale our physics
were all opposing force but essentially
the same story arc unfolded with those
two expansion packs but from the
perspective of a different character so
now you could go through the game again
but this time through this character and
this time through this character and
that introduces this the whole notion of
expansion Paks was tremendous it allowed
people to experience the game in
different ways it also allowed coders to
go in and make their own updates using
the engine called mods and the modding
community is it would be called embraced
it and the result was not only mods but
completely new standalone games if you
think back to the origins of these guys
right from Microsoft Microsoft Windows
is like a platformer that sure they had
their own products like Excel and word
and things like that but they also
allowed you with Microsoft Windows to
make other things that you thought would
be interesting on the platform of
Windows well likewise the mods on the
platform of half-life it was like an
open environment where you were invited
to come in and build something using the
framework
unlike music where when it’s done it’s a
closed thing and it’s finished and if we
know anything about the history music
people made mods based on music they
were called rap songs and they would
sample things about songs from years
gone by and there would be lawsuits
hey man you stole part of my work and
you’re doing it because music was a
closed and finished environment the
gaming community it couraged expression
and creating mods that was a pioneering
difference in what you did with the
finished artwork and so now you also
have this interesting thing is the quake
engine that led to valve in the building
of half-life now half why it had an
engine that was leading to mods that
were just
you know what I think was most
interesting about it was if you think
about the mods back in those days you
know day of defeat was set in World War
two and I really like that mod I really
wasn’t into half-life but the day of
defeat came out I did play day of defeat
the World War 2 mod on half-life but
other people were completely into a
thing called counter-strike
counter-strike would lead to a series of
mods which would also lead to valve
actually recruiting and bringing the
entire counter-strike creative team on
board and then standalone products so it
shows you that look at the smarts of
that it actually leads to somebody
coming in that would be like van Halen
inviting people to come in and create
music based on Eddie Van Halen’s riffs
then they create their own stuff and
then van Halen invites them into the
band and builds albums that van Halen
owns as you can see it just doesn’t
happen at other creative mediums but it
certainly did in the gaming medium and
it certainly did with half-life
what started as a quake engine was now
its own engine and spawning things and
it was just absolute success story what
was interesting is there be one more
page in the chapter here valve would go
on to create steam and steam was a
complete digital distribution platform
that had digital rights management had
multiplayer gaming and social elements
so guess what learning from their roots
they created sort of the Microsoft
Windows of gaming called steam and that
my friend is the story of valve and
half-life taking an engine from mid
their Microsoft roots all the way
through the success of half-life and
it’s mods ultimately resulting in a
platform called steam as I wrap up let’s
go back to those three points I
mentioned first passion is indispensable
and we can see how even though the valve
guys were software guys and not gaming
guys they had a passion for gaming and
they would take that forward second when
you enter a sector know what you know
everything you can possibly know about
it and go learn from people they learn
from
karmak and even got the suggestion to
use his quake engine as the heart and
the original seed of their launch and
then third if you remember if your
products late it’s only late for a short
time but if it sucks it’s gonna suck
forever and valve refused to put out a
product in 1997 that they didn’t think
was great
instead by November of 1998 they had
actually rebuilt part of it their
passion in tow and they put out a
product that was great and changed the
PC gaming industry and I think we can
learn things from that whether you’re
running a small company in Indianapolis
Indiana or you’re building what you hope
to be a huge gaming company these
lessons I think apply to you
and for that that’s our case study for
today and we have Paul boom all right
good toss this time thank you for
watching case studies with the biz doc
here on value tainment please subscribe
because we’re on a mission thanks to you
to hit a million subscribers by the end
of the year and until next time in
another case study I’m Tom Ellsworth I
hope I left you better than I found you [Music]
Please follow and like us: