Radar
r FREE T>4E FILES
BLOUUING
OFF STEfl
s we go to press, Half-Life 2 is
ready to ship. It has been for
months now. But you haven't
seen it on store shelves
^ because of an ongoing dis-
pute between developer Valve and pub-
lisher Vivendi Universal Games. How did
it get to be this bad?
On August 14, 2002, attorneys from
Preston Gates & Ellis filed a complaint
against VUG (then Sierra Entertainment)
alleging unauthorized distribution of
Valve products in cyber cafes. That was
just the beginning. "Almost a year and a
half into the lawsuit," says Doug
Lombard!, director of marketing at Valve,
•'Vivendi responded by mal<ing a number
of claims in an attempt to invalidate our
34 ':OMP!jTERGAMir.)G WORLD
Snagging the scoops and spotting the trends
agreement and be awarded the owner-
ship of the Half-Life intellectual property."
Bickering over money is one thing,
pulling out a six-shooter and demanding
Valve hand over the Half-Life brand is
another VUG refused to comment on
pending litigation, and Howard Rice, the
firm handling its case, did not return our
requests for comment. Lombardi side-
stepped speculation by saying he "cannot
speak to [VUG'S] motivations."
IRRECONCILABLE DIFFERENCES
Case documents reveal VUG's areas of
concern, which stem from contract rene-
gotiations in 2001, Steam, Valve's online
distribution service, was part of negotia-
tions, but VUG claims Valve "misrepre-
sented" its importance. VUG alleges
Valve managing director Gabe Newell
downplayed Steam, stating, 'Valve did
not plan to engage in anything other
than de minimis [small] distribution [of]
games online," Valve does not feel
Steam was "misrepresented,"
Gonspiracy-laden plots may be part of
Valve's games, but they do not make for
good business practices.
Instead, blame may fall squarely on
ignorance. "Vivendi has to have known
about Steam," suggests an industry ana-
lyst at a respected financial institution
who requested anonymity. "They soct of
shrugged off Steam." Apparently, that is
no longer the company line. "They really
believe they re going to lose a lot of
 Our insidious spy
network snagged
the first info about
Age of Empires III.
"Digital distribution is
part of gaming's future."
must be seeing the writing on the wall.
An ace still exists up VUG's sleeve. Part
of VUG's contract states it has six months
after submission of a final release candi-
date to ship a game. As the holiday shop-
ping season rapidly approaches, the com-
panies have been playing chicken.
Financially Valve has the upper hand.
VUG is the only division of Vivendi
Universal losing money, ceporting a record
loss of $136 million in June, "It's no secret
that Vivendi's bleeding cash; it's no secret
that morale is low there," says our analyst.
In the event that VUG turns up the
heat and sits on Half-Life 2. Valve is pre-
pared "We're hoping it doesn't come to
that, but we are considering all of our
Want to win
some of the
swag that comes
Into our office?
Valve aims tp meet the obligations of its
current agreement. Just don't bet on
Valve and VUG working togeth^-r again
anytime soon. Outside of settling a
score, the case will likely create industry
standards on how Internet distribution
plays in to the developer-publisher rela-
tionship. "With the rapidly expanding
use of the Internet," says Dick Lester, a
lawyer of over 25 years and currently VP
general counsel at Riddetl, "it will be
necessary for courts to develop a new
set of precedents to define this unique
means of distribution."
Stephen "Blue" Heaslip of popular news
site Blue's News also senses the industry
paying close attention. "I think there are ..
Cary Elwes, actor and
voice of The Bard's
Taie, talks to CGW
about wearing tights,
140
Here we see Gordon and
friends dealing with the worst
case of crabs known to man
great interest to see how the grea.
Steam experiment progresses," he
while cautiously noting he does not
know "if [online distribution] can ever
supplant retail sales anytime soon."
"Digital distribution is part of gaming's
future," stresses our analyst, "and it's
going to have to be lead by someone hke
Valve. If they're successful with it, you'll
see other studios like Valve try and do
something similar."
Heaslip agrees. "Valve is taking some
lumps as the early adopter here." But if
Half-Life 2 distribution over Steam is a hit,
more online game distribution will follow.
Udj^e just want to blow up some head-
is already Patrick Klepek
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