How Gabe Newell Achieved a Net Worth of $5.5 Billion

Let’s start this article by stating what should be obvious. Most people have a difficult time getting their head around one million dollars, let alone one billion dollars. They are just numbers we use to compare one insanely rich person to another.

If you aren’t a gamer, specifically a PC gamer, you are not likely to be familiar with the name Gabe Newell. He is the owner of the Valve website, which is largely fueled by Steam, another website. All he does is sell a variety of games online to an estimated 125 million customers and just keeps a share of the sales. A simple concept, true, but the gaming industry has literally millions of users who are looking either for older versions of games that run on PCs instead of dedicated gaming systems, or for the younger, modern gamer who buries his mind in online competitions.

For those who want evidence that a formal education has little value, Newell is a Harvard University drop out. Forbes magazine has done a number of articles on him, particularly in their 100 Richest Men” feature stories over recent years. But he didn’t just drop out of Harvard and start his own business. He worked at Microsoft for more than a decade before stepping out on his own.

But it isn’t his Microsoft salary that accounts for the bulk of his net worth. Valve boasts more than 19,000 games for players of all ages and interests to choose from. He is also a game developer, and was responsible for the award winning Half Life game that racked up more than 50 awards for the best game of the year. It should be noted that much of his work at Microsoft involved the development of the Windows operating system. In Newell’s case, familiarity breeds cash.

The problem so many snoopy writers have is finding out exactly where Newell’s money came from. There are estimates that his Valve website makes an estimated $100 million per year, which after 20 years of existence would add up to about $2 billion. But that’s less than half of his accumulated wealth, and the exact numbers he makes from his gaming interests are apparently closely held secrets.

However, we can make some guesstimates to get a clue as to how he made his wealth. There are sales figure for his major developed games that can be used to get the number higher. We’re going to use conservative figures here, so feel free to up the total if you wish.

First are his Half-Life series:

  • Half-Life (1998) – 9.3 million @ $49.95 = $464 million
  • Half-Life: Opposing Force (1999) – 1.1 million @ $49.95 = $54.595 million
  • Half-Life: Blue Shift (2001) – 800,000 @ $39.95 = $31.96 million
  • Half-Life 2 (2004) – 6.5 million $49.95 = $324.765 million
  • Half-Life 2: Episode One (2006) – 1.4 million @ $49.95 = $69.93 million

Then comes the Counterstrike adventures:

  • Counter-Strike (2000) – 4.2 million @ $39.95 = $167.790 million
  • Counter-Strike: Condition Zero (2004) – 2.9 million @ $39.95 = $115.855 million
  • Counter-Strike: Source (2006) – 2.1 million @ $39.95 = $83.895 million

Adding up these admittedly low estimates, the rough total is $1.3 billion. That leaves us at least $2 billion shy of his reported net worth, especially when you consider that there are a lot of costs and expenses associated with the marketing and sales of a product.

So with the available resources, this is about as close as we can come to Newell’s actual net worth. The current estimated of Valve is $10 billion, of which he is a 50.1 percent stakeholder. However, no one actually knows the real market value of Valve. There are some studies that show younger people are less interested in the major sports and more interested in an interactive form of relaxation. Give credit to Gabe as he foresaw the future of the gaming industry as a place where people simply wanted a time and space to disconnect from the monotony of the workaday world and have fun.

It is important to consider that Newell isn’t really a celebrity. He obviously keeps his finances close to the vest, and for good reason. As for his future wealth, there is no abatement of interest in the gaming industry, so expect Gabe Newell to continue to appear in those special editions of Forbes magazine.

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