Valve as a company and Gabe Newell himself were on the verge of bankruptcy in the days before the launch of Steam and Half-Life 2, thanks to a lawsuit from publisher Vivendi Games. Disaster was narrowly averted thanks to the fact that Valve just happened to have access to a summer intern who could translate Korean.
Back in 2004, Valve had already launched a handful of the best FPS games ever made, including Half-Life and Counter-Strike, which had both been published by Sierra Entertainment, a subsidiary of Vivendi Games. While Valve intended to self-publish Half-Life 2 on the then-new Steam platform, Vivendi had retail publishing rights to the game. Ahead of Half-Life 2's release, Vivendi was distributing copies of Valve's games to cyber cafes in Asia - something which, Valve argued, Vivendi did not have the right to do.
The ensuing legal battle lasted through 2005, when the two companies settled with what sure seemed like favorable terms for Valve: Vivendi would give up retail distribution rights and transfer all those cyber cafe licenses to Valve. This has all long been a matter of public record, but Valve's new 20th anniversary documentary on the making of Half-Life 2 reveals just how dire the situation was at the time and just how lucky the company got in managing to force that settlement.
Valve attorney Karl Quackenbush explains that Vivendi initially hired a small law firm to defend the publisher against Valve's lawsuit. "There was some initial skirmishing about discovery, there were some disputes and motions that had to be decided by the judge, and those went all Valve's way," Quackenbush says. "And then suddenly the law firm disappeared. They hired a big scary law firm from San Francisco. They thought, 'Okay, Valve's had some success in this case, and so we need to change their mindset from "We think we're gonna be successful" to "We're gonna be destroyed."' The next thing we knew, here comes this big stack of counterclaims, everything from canceling the
Counter-Strike
UPS
Half-Life
president
rights
International
Gabe Newell
Sierra Entertainment
Dustin Bailey