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Founding and incorporation

Valve was founded by former longtime Microsoft employees Gabe Newell and Mike Harrington on August 24, 1996,^[3][4] as Valve L.L.C., based in Kirkland, Washington on the Seattle Eastside. Harrington left the company in 2000. After incorporation in April 2003,^[5] it moved from its original location to Bellevue, Washington, the same city in which their original publisher, Sierra On-Line, Inc., was based. In 2010, the office was moved again to a larger location in Bellevue, WA.^[6]

In 2016, the Kemper Development Company announced that Valve had signed a nine-floor lease in the Lincoln Square complex in downtown Bellevue, doubling the size of their offices.^[7]

Half-Life

After securing a license to the Quake engine through the help of friend Michael Abrash of id Software in late 1996, Newell and Harrington began working on Half-Life. Originally planned for release in late 1997, Half-Life launched on November 19, 1998. Valve acquired TF Software Pty. Ltd., the makers of the Team Fortress mod for Quake, in May 1998 with the intent to create a standalone Team Fortress game.^[8] The Team Fortress Classic mod, essentially a port of the original Team Fortress mod for Quake, was released forHalf-Life in 1999. Gearbox contributed much after the release of Half-Life. Gearbox Software is responsible for the Half-Life expansion packs, Half-Life: Opposing Force and Half-Life: Blue Shift, along with the home console versions of Half-Life for the Sega Dreamcast and Sony PlayStation 2 which included a third expansion pack called Half-Life: Decay, that enabled two-player split-screen co-op.

Source game engine

After the success of Half-Life, the team worked on mods, spin-offs, and sequels, including Half-Life 2. All current Valve games are built on its Source engine. The company has developed six game series: Half-Life, Team Fortress, Portal, Counter-Strike, Left 4 Dead and Day of Defeat. Valve is noted for its support of its games’ modding community: most prominently, Counter-Strike, Team Fortress, and Day of Defeat. Valve has branched out with this tradition to continue developing Dota 2 as the standalone sequel to the Warcraft III mod.^[9] Each of these games began as a third-party mod that Valve purchased and developed into a full game. They also distribute community mods on Steam.^[10] Valve announced the Source 2 engine on March 3, 2015.^[11]

Acquisitions and awards

Valve has grown both in scope and commercial value. On January 10, 2008, Valve announced the acquisition of Turtle Rock Studios.^[12] On April 8, 2010, Valve won The Escapist Magazine’s March Mayhem tournament for the best developer of 2010,^[13] beating out Zynga in the semi-finals and BioWare in the final.

In 2012, the company acquired Star Filled Studios, a two-man gaming company to open a San Francisco office.^[14] In August 2013, however, Valve ended the operation when it was decided that there was little benefit coming from the arrangement.^[15]

Network intrusions

Valve’s internal network has been infiltrated by hackers three times, once in 2003 where content of yet to be released Half-Life 2 was leaked onto the internet,^[16] Newell’s email account was compromised, and keyloggers were installed on several Valve systems.^[17] In 2011 the Steam customer databases and official forums were compromised.^[18][19] On September 2011, a hacker broke into the network and downloaded the yet to be released beta code of Call of Duty: Modern Warfare 3.^[20][21]

In 2014, a developer from SCS Software reported an exploit that allowed announcement pages to be injected with code, and after no response, he edited an announcement to redirect users to a Harlem Shake (meme) video.^[22][23][24] In 2016, a vulnerability on the Steam Store allowed a user to publish a game without any authorization from Valve.^[25][26]

Legal disputes

Valve Corporation v. Vivendi Universal Games

Between 2002 and 2005, Valve was involved in a complex legal showdown with its publisher, Vivendi Universal Games (under Vivendi’s brand Sierra Entertainment). It officially began on August 14, 2002, when Valve sued Sierra for copyright infringement, alleging that the publisher illegally distributed copies of their games to Internet cafes. They later added claims of breach of contract, accusing their publisher of withholding royalties and delaying the release of Counter-Strike: Condition Zero until after the holiday season.

Vivendi fought back, saying that Gabe Newell and marketing director Doug Lombardi had misrepresented Valve’s position in meetings with the publisher. Vivendi later countersued, claiming that Valve’s Steam content distribution system attempted to circumvent their publishing agreement. Vivendi sought intellectual property rights to Half-Lifeand a ruling preventing Valve from using Steam to distribute Half-Life 2.

On November 29, 2004, Judge Thomas Samuel Zilly of the U.S. District Court for the Western District of Washington ruled in favor of Valve. Specifically, the ruling stated that Vivendi Universal and its affiliates (including Sierra) were not authorized to distribute Valve games, either directly or indirectly, through cyber cafés to end users for pay-to-playactivities pursuant to the parties’ publishing agreement. In addition, Judge Zilly ruled that Valve could recover copyright damages for infringements without regard to the publishing agreement’s limitation of liability clause.^[27] Valve posted on the Steam website that the two companies had come to a settlement in court on April 29, 2005.^[28]Electronic Arts announced on July 18, 2005, they would be teaming up with Valve in a multi-year deal to distribute their games, replacing Vivendi Universal from then onwards.^[29]As a result of the trial, the arbitrator also awarded Valve $2,391,932.