Valve, the videogaming giant behind hits like Half-Life and Steam, recently celebrated the 25th anniversary of its first best-selling game, Half-Life. Valve’s co-founder, Gabe Newell, who is worth an estimated $9.5 billion, has become increasingly reclusive, living on one of his five ships since the pandemic. Valve’s financials have revealed a sustained 40% operating profit margin for a decade, making it more profitable per employee than companies like Amazon and Microsoft. Last year, Valve had its best year ever with an estimated $5 billion in revenue, largely driven by its digital sales platform, Steam.
Steam, Valve’s game distribution platform, has a dominant 75% market share globally and contributes an estimated $3 billion to Valve’s revenue, making it a cash cow for the company. Valve’s foray into hardware with the launch of the Steam Deck in 2022 has also been successful, with nearly half a billion dollars’ worth of consoles sold in its first year. Newell’s strategy has always been to double down on what he believes in, and his success with Valve’s games and Steam platform has made him a legendary figure in the industry.
However, Valve’s near-monopoly position in the gaming industry has attracted criticism and lawsuits, particularly regarding its 30% cut on sales through Steam. Competitors like Epic Games have emerged as viable alternatives, with the Epic Games Store offering a more developer-friendly 12% cut. Despite some companies temporarily removing their games from Steam, they ultimately return due to the platform’s massive audience. Valve is currently facing lawsuits alleging anticompetitive behaviors, and Newell has not publicly commented on Valve’s future in several years.
Newell appears to be spending less time on Valve and more on personal passion projects, such as Starfish Neuroscience and Inkfish. Starfish is focused on developing the next generation of neural interfaces, while Inkfish operates a mini-fleet of ships and submarines for maritime research and philanthropic fundraising. Newell’s increasingly hands-off approach at Valve has led some industry experts to question the company’s future leadership. Despite the uncertainty, Valve continues to be a major player in the gaming industry with its hit games and dominant position in the market.
