1. Unit 7 – Understanding the Creative Media Sector
Multi-National Media – Valve
By Johnny Ray Brolly

2. Overview
Valve is a video game developer, digital distribution, software and hardware engineering company.
It’s headquarters is based in Bellevue, Washington, but it provides products and services all over the world.
It was founded in 1996 by former Microsoft employees, Gabe Newell and Mike Harrington.

3. Sector
Valve fits into the sector of computer games and interactive media.
They’re a company that’s notable for the vast array of popular video games that they’ve produced, but most especially for their creation of the revolutionary digital distribution service Steam.
In 1998 Valve released their first game, “Half-Life”. This was a game that was very successful commercially and critically. “Half- Life’s” success paved the way for the creation of other titles in Valves collection of popular video games like “Portal”, “Team Fortress” and “Left 4 Dead”.
Simultaneous to their release of “Half-Life 2”, in 2004 Valve launched its digital game distribution service, titled Steam.
Steam is a software that allows gamers to install digital copies of games that are updated automatically. It essentially functions as an online shop for video games that can be accessed worldwide. This makes them a multi-national company providing services worldwide.
It also serves as an online gaming platform as well as a social media outlet.

4. Structure and Ownership
Valve is a privately owned company.
It’s a vertically integrated company, meaning that it has full rights to both the ownership and all of the profits to the products and services that it creates.
Valve is classified as a limited liability company in the United States.
A limited liability company is a business that combines elements of both a corporation and a partnership or a sole proprietorship.
Like a corporation Valve acts as a single entity, but also similar to a sole proprietorship it is owned by one single person.
Formerly Valve was a partnership between founders Gabe Newell and Mike Harrington, but Harrington left the company early in its inception, leaving sole proprietorship to Newell.
The primary characteristic of an LLC is that it’s a flow through entity.
This means that only the owners of the entity are subject to taxation, because the income of the entity is considered as being the income of the owners.
Valve will often hire the whole development team of smaller games that they see potential in essentially buying them out.
They’ll also buy ownership of certain mods from fan creators that they think could be profitable.

5. Sources of Income
Valve still receives income from the games that they’ve produced in the past but doesn’t seem to have much interest in producing more.
Valve profits mostly from it’s free to play games.
Although these games don’t require payment to play the include several extra features like additional weapons and character clothing which players have to pay for to unlock.
Free games that they would garner the most income from include “Team Fortress 2” and “Dota 2”
They also have the rights to 30% of payments for every game sold on Steam.
This is where the majority of their income comes from. Players of their free to play games paying for additional features and the cut they get from Steam sales.
More recently they’ve been pursuing to gain income from gaming hardware they’ve developed.

6. Product Diversity
Valve was originally most well known as a game developer. “Half-Life” paved the way for a number of successful Valve games. The most recent game Valve developed was “Dota 2”.
In the last couple of years or so, Valve has been shifting its focus more so to the service it provides with Steam and buying features for their free to play games from community developers rather than developing games themselves.
Valve’s most recent ventures have been the development of hardware like the Steam controller, and the Steam Operating software for the Steam Machine.
In addition to these products and services Valve also sells merchandise for fans of their games. This includes the likes books and action figures.
Product diversity is very strong within Valve’s content. Their products and services range from games to software and hardware.

7. Profitability of Product Range
Valve has a net worth of $1.5 billion.
Their games have all performed well, with their best selling games being “Half-Life” one and two, which both sold 9.3 and 6.5 million retail copies respectively. These numbers don’t even account for their Steam sales either.
Valve has an income of approximately $10 million every six months from the additional features sold on their free to play games.
Steam has about 125 million active users all using the service to purchase games at varying prices. These statistics indicate that Valve make a hefty sum of money.
Overall Valve is a very diversified and successful business.

8. Competitors
Sony, Microsoft, Activision, Ubisoft and EA would be the largest multi-national game publishers and the biggest competitors of Valve.
EA has attempted before to buy out Valve for $1 billion before.
CEO of Valve, Gabe Newell declined this offer stating that Valve would sooner disintegrate than “find some giant company that wants to cash us out and wait two or three years to have our employment agreements terminate.”
Valve has become a competitor towards the likes of Apple with the direction they’ve taken in focusing more on the digital distribution of media and creating software.
Although many of these competitors are of a higher profile than Valve, Valve has ownership of very revolutionary property with Steam, which is something that gives them an advantage.

9. Rating as a Career Choice
I’m a big admirer of the business that Gabe Newell and Mike Harrington have created with Valve. I’ve enjoyed many of their games and know many people who enjoy the service they provide with Steam.
I think that the people behind Valve have managed to create a company that makes the maximum profit that they can, while also providing a quality service to their customers.
This is something that every company should strive towards.
However, although I admire the work that Valve does I’m not so sure that working for them would be the best career path for me personally.
I’m not as passionate about video game content and technology as I would be with film and animation. In addition to this I wouldn’t be as knowledgeable in that field of work either, which would mean I’d probably be out of my element.
If Valve was to continue developing games I’d perhaps suit work in the role of a concept artist, because I possess some illustration skills. But Valve has since taken a different direction with their company.
In conclusion I greatly appreciate the work that Valve do, but I don’t personally think I’d be well suited to working for their company.