21 Years Ago Valve's Future Was Saved by Counter-Strike 2 Deal. Gabe Newell Made Knife Out of Joy
The contract to develop a game called Counter-Strike 2 was signed back in 2003. To celebrate this success, Gabe Newell - the founder of Valve - handmade a knife with the name of the game.
Valve is undoubtedly a giant in the video game industry today, but the company's beginnings weren't easy. More details about the company's troubled past were revealed in a recently released two-hour documentary, which was produced to mark the 20th anniversary of Half-Life 2 release.
The long material revealed that the deal for Counter-Strike 2 was signed already in 2003 . How did this happen and why couldn't it be achieved? The legal dispute began with a much larger company, Vivendi, which owned the Sierra Entertainment studio responsible for releasing the first Half-Life and holding the rights to the brand at the time (more about Valve's conflict with that company can be found in our news about Half-Life 2 and Steam). The conflict stemmed from Sierra's sale of Counter-Strike (which was then a Half-Life mod) to the Asian market without the consent of the game's creator. As a result, Valve started a battle to regain full rights to the popular franchise.
The case dragged on for years (finally ending in success for the owner of Steam), and as a result, it consumed a lot of money. To save the company from bankruptcy, Scott Lynch (Valve's COO) was looking for a partner to sign a contract for the next project after the release of Half-Life 2 – it was to be the second installment of Counter-Strike. Despite finding a willing company, nothing ultimately came of it.
So we're right there, ready to sign. We're really kinda running on fumes at that point. And then get a phone call and they're like 'yeah we changed our mind, we're not doing the deal.' I immediately started looking for the next company.
Finally, the second attempt was successful. To celebrate this success, Gabe Newell himself created a knife with the signature: "Counter-Strike 2." Interestingly, Lynch didn't reveal the name of the company with which the papers were signed, although it was probably Electronic Arts. It was this company that was responsible for the physical distribution of Half-Life 2, which was also extremely popular on Steam.
The disproportion in sales was probably so large that the other party decided to withdraw from the agreement. Lynch jokingly said in the anniversary video that it was a good thing because Counter-Strike 2 was eventually released in 2023.
So the deal structure was, after we ship Half-Life 2, if you decide that you don't want to keep moving forward then you can just decide to terminate the deal and we'll pay the money back. That ended up happening. So… maybe a good choice, because it took us a long time to ship Counter-Strike 2.
Let's remember that in 2004, Counter-Strike: Source was released and it was probably supposed to be the "CS 2." This particular version of the shooter was included in a package sold with Half-Life 2 before it was released as a standalone game on the market.
