Gabe Newell Discusses The In-Game Economy Of Team Fortress 2

One of the more fascinating aspects of PC gaming is undeniably the vast availability of user-generated content, the substantial mod community around such games as Fallout, Amnesia: The Dark Descent, and Civilization V as but a few examples. Valve, a company undeniably connect with its users on a level that many developers and publishers fail to ever achieve, has been a key part of seeing this aspect of the fanbase become legitimate, the Cold Stream expansion for Left 4 Dead 2 as a recent example. Another area where this phenomena has transitioned is the community surrounding Team Fortress 2, with its myriad of user-made hats and content that, as it turns out, even Valve themselves dare not challenge. Instead of fighting it, they've sought to incorporate it into the gameplan, a topic Gabe Newell recently delved into at an hour long talk at the University of Texas at Austin. In Newell's words:

"…Ten times as much content comes from the userbase as comes from us. We think that we’re super productive and badass at making TF2 content, but even at this early stage we cannot compete with our customers in the production of content for this environment.

“The only company we’ve ever met that kicks our ass is our customers. We’ll go up against Bungie or Blizzard, or anybody, but we won’t try and compete with our own userbase, because we already know that we’re going to lose.”

“The most anybody has earned in a single year is $500,000, so they’re making content, selling it to other customers, and we have a revenue share with those people and their takeaway is $500,000. The first two weeks that we did this we actually broke Paypal because…. they’re, “like nothing generates cash to our userbase other than selling drugs”. We actually had to work something out with them and said “no … they’re making hats.”

He goes on to say  that some of the content creators are making more selling Team Fortress 2 items than they are at their jobs at other game companies, adding that the evolving in-game economies prompted them to hire an economist:

“We started to see things like inflation. We started to see deflation. We started to see users creating their own versions of currencies, mediums of exchange. Countries started to create regulatory structures. In Korea you actually have to create the equivalent of a W4 form for your players to account for the virtual income they get in playing your game.”

As an enthusiast of user generated game content and open source development tools, I like to see Valve acknowledging its power. It stands to reason that opening up the talent pool will only work in their favor.

To get more details on the economics side of things, be sure to check out their blog series by economist Yanis Varoufakis.