Consolidation in games must “create value for customers”, says Gabe Newell

Consolidation of the games industry – that is, game companies being bought out and taken over by larger game companies – has increased, intensified and given poor Ed a hard time. Exposed most dramatically by Microsoft racking up $69 billion for Activision Blizzard, this conglomerization trend has raised concerns about both creative expression and the potential locking down of more games on certain platforms.

Valve president and co-founder Gabe Newell is no stranger to making a few additions. Valve hired student developers from Narbacular Drop to work on what eventually became Portal, and acquired Firewatch developers Campo Santo in 2018. In our recent interview, I asked him if he thought the consolidation might be a problem for the industry in the future.

“Any type of acquisition or consolidation must answer the question: how do you create more value for customers, ultimately?” Newelle replied “How do you make your game developers better developers? If you don’t do something like that, then these types of acquisitions and consolidations don’t end in a positive way. And if you do that, then you know, well, you’re improving the game market. So I tend to be more skeptical of what kind of value is being created.

“I mean, it’s a lot of fun. If you’re a CEO, it would be like, ‘Look, I’m doing a lot to make the world a better place.’ When in fact most of the time it’s really boring stuff about “how do you improve your product?” How are you improving your quality assurance processes? which are real determinants of success.

Newell is also skeptical that attempts to create closed platforms, through consolidation or other methods, would succeed specifically on the PC. Instead, companies that embrace PC openness are likely to do better:

“I don’t see any evidence that people are turning to more closed approaches. And also, I don’t think the PC industry will tolerate it. People love PC and despite the fact that many people prefer other outcomes, PC gaming continues to improve year after year, relative growth against other closed and proprietary platforms continues to improve . So that’s something that we hope will continue.

It’s true, we PCs a lot can be a grumpy bunch. And Newell’s words match Valve’s buy-and-hire activity: the Campo Santo merger seems to have been more of a simple talent acquisition than a plot to gain Steam exclusivity for Firewatch or whatever. While this unfortunately led to In the Valley of Gods being suspended indefinitely, former Santo devs have since contributed to Half-Life: Alyx, Dota Underlords, and even the Steam Deck. Which I just reviewed, and it’s pretty nifty.

Speaking of which, you can read our full interview with Gabe Newell now for insight into the Deck’s past, present, and future, as well as other gaming industry issues like the emergence of NFTs.

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