The wealthiest man in the video game industry has a name you likely haven’t heard; he runs a company you probably haven’t heard of; he wears a wild beard and, often, the same black polo.
Yet, Gabe Newell is worth over $4 billion, and the company he founded, Valve Software, is one of the most successful game companies in the world.
Notably, Newell just showed up at No. 134 on 2016’s Forbes 400 list, sandwiched between oil and gas tycoons. Unlike his contemporaries, though, Newell made his billions in technology and video games. His career started as one of the original creators of the Windows operating system at Microsoft; he even followed the collegiate path of Microsoft founder Bill Gates in dropping out of Harvard to work in computing.
Using money earned from being an early Microsoft employee, Newell (and former partner Mike Harrington) created Valve Software. The company initially focused on creating traditional, narrative-driven single-player games. Classics like “Half-Life” and “Half-Life 2” came from this era, but what really put Valve on the map was Steam.
Sound familiar? It should: Steam is, by far, the most widely-used digital storefront online.
It’s got nearly 200 million active users around the world, and every time those folks buy a game, Valve takes a cut. (Though that cut is variable, the average is about 30% of each sale.)
Notably, Valve remains a private company. Outside of operating Steam, the Bellevue, Washington-based company also makes some wildly popular games: “DOTA 2” and “Team Fortress 2” are among the most popular games on Steam.
Valve also co-produces the HTC Vive virtual reality headset, and the hardware is powered by — you guessed it — Steam. Like Apple, Valve created an ecosystem that hundreds of millions of people bought in to in Steam; it’s the equivalent of Apple’s App Store, only for PC and Mac computers. Steam is also far better than Apple’s App Store on Mac.
As such, Steam users are fiercely loyal — competing services like EA’s Origin and Microsoft’s Windows 10 storefront capture a tiny fraction of Steam’s massive userbase. That combination of massive numbers and loyalty adds up to a very profitable business — one that turned Newell into a billionaire many times over.