One of the less visible reveals from Microsoft’s dramatic document leak is that Xbox head Phil Spencer and the Microsoft board of directors were interested in making a bid to acquire Bellevue, Wash.-based software developer Valve Software.
In this week’s Xbox leak, a number of documents were submitted as exhibits in Microsoft’s ongoing hearings against the FTC, many of which were accidentally made public. This included an August 2020 email between Spencer and Microsoft marketing leaders Takeshi Numoto and Chris Capossela.
The email was primarily dedicated to the chances that Microsoft could acquire or merge with Nintendo, the possibility of which Spencer described as a “career moment.” As a side note, however, Spencer mentioned that Microsoft had a “writeup” on the possibility of acquiring Valve, and that Microsoft’s board of directors was open to the opportunity if it came up.
The Nintendo leak has naturally gotten most of the attention (especially the note that Spencer is/was apparently in touch with at least two parties that are actively acquiring Nintendo stock), but a theoretical acquisition of Valve would have a comparable impact.
Valve is the company behind several of the highest-profile franchises in the modern games industry, the most prominent of which is arguably the Half-Life series. Half-Life, in turn, gave rise to the popular military shooter Counter-Strike, which has a sequel arriving at an indeterminate point in the near future.
More importantly, Valve is the sole owner and operator of Steam, the original storefront for digitally-delivered PC games, which recently celebrated its 20th anniversary. Steam is in a near-constant competition with other digital storefronts, including Microsoft, but has yet to give up its dominant sales position.
Steam also lent its name to Valve’s portable gaming PC, the Steam Deck, which is reportedly on track to reach 3 million units sold by the end of this year.
Valve, like most major players in the games industry, doesn’t usually disclose its internal numbers. Even its annual end-of-year breakdown isn’t organized in a simple, linear order. However, analysts will often attribute anywhere from 50-to-70% of global PC gaming revenue to Steam. It was estimated at bringing in $4.3 billion in revenue in 2017, which was before it broke its concurrent user record several times during and after the COVID lockdowns in 2020.
Valve would be an obvious get for Microsoft’s games division if it only owned Steam. Its lineup of genuinely iconic video game franchises is just icing on the cake. That being said, it’s also difficult to imagine a scenario in which Valve was at all receptive to the deal.
“One of our strengths as a company is that we don’t have any external investors,” Valve’s Robin Walker told me in 2020. “We’re fully self-owned. We have the freedom to look at what’s coming, look at what’s changing, and try to adapt to that. We don’t like to make plans that go too far out because we couldn’t maintain that flexibility.”
A lot of Valve’s identity as a company is tied up in that spirit. It doesn’t need to keep shareholders happy and its president is already an eccentric billionaire. That leaves Valve free to chase whatever strange pursuits it likes, such as randomly deciding to design and sell a portable gaming PC during an international chip shortage. Valve, like Nintendo, doesn’t have to make any sense if it doesn’t want to.
While there is in theory a point at which Microsoft could throw a big enough check at Valve to make the acquisition happen, the resulting company would not be the Valve that its fans and customers have grown accustomed to. It would simply be an Xbox studio with Valve’s name on it.
Obviously, to quote Walker again, “anyone who thinks they know exactly what the state of the video game industry is going to be five years from now is quite likely to be wrong.” It’s possible if unlikely that Valve could somehow crater itself so spectacularly that it ends up looking for a buyer. As the company stands today, however, Valve is so fiercely independent that even a big player like Microsoft isn’t likely to get it to sell out.
