Now everyone knows Valve’s hit game Half-Life, and most PC gamers use Steam. But everything could have turned out quite differently.
Monica Harrington was Valve’s chief marketing strategist in the early years. She says that the world narrowly avoided an alternate reality where Half-Life left Valve in ruins, and she helped prevent it.
In August, Harrington published her memoir «The Early Days of Valve from a Woman Inside». The memoir details Valve’s early struggle with publisher Sierra On-Line from the perspective of a person who is not noticed in the studio’s history. Monica shows that the company’s mythologized success was far from guaranteed.
In 1998, Valve was in a difficult situation. The launch of Half-Life was not just a first for the studio — it was a matter of survival. Although the Half-Life demos were a hit at E3 1997, the following summer’s internal demo received mixed reviews from testers. Meanwhile, the money Harrington and Newell had invested in their fledgling studio was being swallowed up by ever-increasing costs.
«If Valve had released the game as it was, it would have launched and quietly disappeared, and all the work we all did would have been irrelevant. All the people we had hired would have lost their jobs, we would have lost the money we had invested. It was a disaster,» Harrington writes.
Against the backdrop of such a high stakes game, Valve made an offer to the publisher to stop the current development and start creating a better Half-Life. Sierra did not give its blessing. When Valve began to redesign the game, it did so without additional funding from the publisher.
In retrospect, it’s easy to say that it was the right choice. Half-Life was released in November 1998. By the end of the year, the game had received more than 50 awards. Thanks to Harrington’s marketing strategy, the credit for this belonged solely to Valve, not Sierra.
In the run-up to Half-Life’s release, marketing focused on Valve’s reputation among industry peers and the press, writing and distributing background materials on developers who attended conferences, and so on.
«Shortly before Christmas, the Wall St. Journal ran an article with the headline «Valve’s storytelling game — is a hit. The article didn’t mention Sierra as our publisher at all,», — Harrington says.
However, despite the praise of critics, Half-Life might not have become the outstanding success it became. And this was the most likely scenario. When Harrington began planning Half-Life’s retail sales strategy for the new year, Sierra announced that it was leaving the project.
«Essentially, their message to us was «thank you, the game is great, we’re moving on». Their marketing at the time was a Launch and Leave strategy, whereas we were trying to sell a game worthy of a franchise that we could build for years to come».
In the late 90s, game sales were very different. Without traditional advertising and a retail presence, a game could easily have remained «dead». Harrington told PC Gamer that if Sierra had given up marketing Half-Life, Valve would have been doomed.
«There is an alternate universe where Half-Life disappeared after release simply because there would have been no support in the retail channel. If Half-Life had failed in the market, the company would not have survived. And it almost happened because Sierra had no idea how to handle the impact of the potential scale of Half-Life».
Meanwhile, Harrington had no intention of wasting Half-Life’s initial momentum.
«Thanks to my previous position at Microsoft, I knew how to maximize Half-Life’s potential in the marketplace, and I was ready to go for it, and I was also very ready to use the leverage we had to make sure Sierra was delivering. We owe that to the Valve team, as well as to the gamers who were already falling in love with the game».
At the same meeting during which Sierra announced its withdrawal, Harrington said that if the publisher didn’t double down on Half-Life marketing, Valve would walk away from the deal and the industry would know how Sierra «screwed up». The result was the Game of the Year boxed edition, one of the earliest examples of such retail tactics.
Half-Life sales began to grow, but Valve’s prospects were still dire. The signed publishing agreement meant that Sierra owned the Half-Life IP and had exclusive rights to publish Valve’s next games. The agreement meant that despite the ever-increasing costs of game development, Valve would receive an upfront payment of $1 million for each game development and would earn only 15% of the royalties from sales. It was «bondage» for years.
To get out of the deal with Sierra, Harrington helped formulate a strategy that allowed Valve to issue an ultimatum: if Sierra did not renegotiate the terms of the agreement, Valve would simply stop developing games and move on to other software.
«Since Gabe and Mike had vast experience in other aspects of software development, the threat was not a bluff». Monica Harrington, thanks to her experience at Microsoft, didn’t see this as a problem either.
The arguments were strengthened by the proposal to partner with a small company called Amazon — to create a digital game store that sounds very similar to the future Steam. Thus, Valve returned to the negotiating table with proof of its ability to continue developing alternative software from which Sierra would not see a single penny.
Valve successfully renegotiated its agreement with Sierra in 2001, gaining control of the Half-Life IP and online distribution rights for its games. Without this revision, Half-Life 2 might never have happened, and neither Steam nor Portal would have been seen by anyone. As well as of the upcoming Half-Life 3, which is allegedly under development.
Source: PC Gamer