Does it tell people what it's doing?
Gabe Newell: Yes it does - it'll pop up a message saying: "Your hard drive is really fragmented, we're going to go out and fix it unless you say don't". For other developers, I think there's a perception that these emerging systems are only good for selling people bits. I think that's the least useful thing that we'll be able to do. For example, we've been able to gather a lot of statistics from Episode One, about which weapons people use, and which ones they don't use, where they're getting stuck in the game, how far they have progressed and where they are dying. In some cases it has been what we would expect, but in other cases there have been surprises. So, not only is it helping us sell the games, it is going to help us make the games better. That's where anything that helps us close that loop with customers - not thinking of them as the other end of a warehouse full of boxes, but instead thinking of them as a huge, distributed computer platform. That's going to be helpful.
What is the split between sales of Episode One via Steam and boxed sales?
Gabe Newell: That isn't something that we've talked about. It's something we're keeping to ourselves.
So, how do you manage your relationship with EA when you're selling games via Steam?
Gabe Newell: Our relationship with EA is fine. I think that retailers are really frightened of these kinds of changes in the industry, and I think that we're learning stuff that is going to be very important for them. For example, Steam enables new ways of doing promotion: we've been doing these free weekends where people can play for a weekend and then the game shuts off. You can't do that with boxes - boxes sit in warehouses, you know, past the time, and you have no way of turning the box off. The interesting thing we found is that when we turned the game off, we generated a bunch of sales on Steam.
And we generated three times as many sales among people who had never played Day of Defeat before, who then went down to a store. So just as a promotional tool, it was way more effective than advertising. Even if you just view it as a way of driving people into stores to buy boxes, Steam is a better solution than these traditional approaches to marketing and sales. I think retailers are starting to understand that communicating more efficiently with customers is a way, not of taking money away from them, but of driving people into stores. It's not a way of cutting them out of the equation.
The thing that happened with Red Orchestra and Darwinia is that, once they were able to prove to people that they could be successful - in this case through a direct relationship over Steam - the retail success followed. Red Orchestra wasn't even getting a retail deal until after they could prove that there was an audience, and Darwinia's sales went up as a result of being on Steam.
What's your take on next-gen platforms? You've always been primarily a PC games company.
Gabe Newell: The PC is going to continue to be our primary focus. It gives us a lot of advantages as a development platform, and it also forces us to confront a bunch of issues, like for us it's very important to work well on older hardware and also take full advantage of new hardware. So the DX7 generation is much slower than the next-gen hardware, but DX10 is actually going to be more advanced than either the Xbox 360 or PS3.