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

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The consolidation of the games industry – that is, games companies being bought up and absorbed by bigger games companies – has been increasing, intensifying, and giving poor Ed the aches. Exhibited most dramatically by Microsoft stumping up $69 billion for Activision Blizzard, this trend towards conglomerification has raised worries about both creative expression and the potential locking-down of more games to certain platforms.

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

“Any sort of acquisition or consolidation has to actually answer the question: how are you creating more value for customers, at the end of the day?” Newell replied. “How are you making your game developers better developers? If you aren’t doing something like that, then those sorts of acquisitions and consolidations don’t end up positively. And if you do do it, then you know, good, you’re making the gaming market better. So I tend to sort of be more on the sceptical side about what sort of value is being created.”

“I mean, it’s a lot of fun. If you’re a CEO, it’d be like, ‘Look, I’m making a big deal to make the world better.’ When in fact, most of the time, it’s really boring stuff about ‘how do you make your product better? How do you make your QA processes better?’ that are real determiners of success.”

Newell is also sceptical that attempts to build closed-off platforms, though consolidation or other methods, would succeed on the PC specifically. Instead, companies that embrace the PC’s openness are likely to do better:

“I don’t see any evidence that people are turning towards more closed approaches. And also I just don’t think the PC industry will tolerate it. People like the PC and in spite of lots of people preferring other outcomes, PC gaming continues to improve year after year after year, the relative growth versus other closed and proprietary platforms continues to get better. So that’s something that we expect will continue.”

It’s true, us PC lot can be a grumpy bunch. And Newell’s words do track with Valve’s own buyin’ and hirin’ activities: the Campo Santo merger seems to have been more of a simple talent acquisition than a plot to get Steam exclusivity for Firewatch or whatever. Though it has sadly led to In the Valley of Gods being put on indefinite hold, former Santo devs have since contributed to Half-Life: Alyx, Dota Underlords and even the Steam Deck. Which I’ve just reviewed, and is pretty neat.

Speaking of, you can read our full Gabe Newell interview now for a look into the past, present and future of the Deck, along with more on other gaming industry issues like the emergence of NFTs.

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