Has Half-Life:Alyx Made Money? Let's Do the Dirty Math on a VR-Only Game

Update, 8:50pm: In a VR community page conversation on this post, Facebook pal and veteran game designer Tadhg Kelly says my original estimate of average Valve salary is way off:  "$150,000 per year per person forgets facilities, office costs, time off and social security etc etc. And Valve reportedly has a healthy bonus structure. Closer to $250,000 easily." I've updated this post and estimate accordingly -- which now suggests Valve is much farther away from a profit from Alyx than I originally guessed.   

We now are pretty sure Half-Life Alyx drove VR installs by about 1 million, and it's a reasonably educated guess to say the game helped sell about 180,000 units of Valve Index, the HMD it was pre-installed on. Another question that looms: Has Half-Life Alyx yet turned a profit for Valve? Putting publicly available reports and estimates together, we can make a tentative answer: Probably not yet.

Here's roughly how much Alyx has made so far:

Direct purchases of Half-Life: Alyx generated $40.7M in revenue, and hundreds of thousands of free copies of the game were also bundled with devices like the Valve Index headset to boost interest in VR.

And here's how many people Valve paid to develop Alyx:

“Right now it’s around 80 people,” the company said, “which puts it as the largest single team we’ve ever had at Valve.”

And here's how long those 80 people have been developing Alyx:

We started in February of 2016, I think, with a small team, and we brought out a small prototype. Then people started to play that, understood what we were trying to do afterward, and started joining up. We had 80 people on the team when we were about midway through. 

OK so development over four years, but not 80 people total during those entire four years. Let's average it out to between 40-60 people per year.

Now time for some dirty math after a quick visit to Glassdoor:

Assume a yearly salary of $150,000 each for those 40-60 employees (because Valve engineers make a lot more on average than that), and that's $6,000,000 to $9,000,000 in Alyx development payroll a year. If we assume average salary/benefits/profit sharing actually come out closer to $250,000 a year, then that range is $10 million to $15 million a year.

Over four years, that comes out to $24,000,000 to $36,000,000 on the low end or $40 million to $60 million on the high end, just in labor costs, to make Alyx.

Add $5-15 million more for marketing, advertising, publicity, various contract labor/short-term costs (playtesting/QA, plus good dialog writing, music, and voice actors don't come cheap!), and so on.

So based on all that, Half-Life Alyx cost Valve about $29,000,000 to $75,000,000 to develop and publish to the world.

And so yeah, if the mid to high range of that estimate is accurate, Alyx probably hasn't made Valve a profit. Yet.

To be sure, the game probably will end up in the black by this year's holiday shopping season. And to be fair, Valve's goal with Alyx was probably at least as much to drive Index sales -- and also quite possibly, to create a large, Garry's Mod type community around the Index and VR in general (per reader seph). But because Valve is steadfast in saying that Alyx will remain a VR-only game, that narrow profit and narrowly expanded install base is about the best Valve can hope for. And indeed, might have been their main goal all along.

But just one contrast to that $41 million for Half-Life Alyx before you go:

Half-Life 2 -- available for Windows, Xbox, Xbox 360, PlayStation 3, Mac OS X, Linux, and Android -- has sold over 12 million copies. Grossing Valve roughly $720 million in game sales alone.

Comments

[Adeon Writer]

You also need to add in the people who paid 1000 USD for the Valve Index + Alyx bundle. Many of them buying it *exclusively* for Alyx.

[Wagner James Au]

Good point. I decided not to factor in Index sales because that makes the estimate way too complicated -- because then you have to speculate how much profit each Index sale makes, and then you also have to speculate how many people bought an Index mainly for Alyx (versus only and somewhat), and also guess/factor in how many people would have bought Alyx for another HMD if it *didn't* come bundled with Index. Etc!

[ArAnAx]

Another crap article on VR... It's not about the profit, even though you didn't cinsider the Index selling out, it's all about developing VR further...

[Adeon Writer]

Well out it this way. When the index went in stock on March 9, welp, at 10:00 AM, I ordered it at 10:01 AM. One minute later.

It’s been over 8 weeks now and my waiting time still says “Greater than 8 weeks”

Alyx or not... Valve is making bank. They can’t make headsets fast enough.

[Kent Bye]

How would you incorporate the fact that Valve makes 30% off of future XR games sold through Steam? Tons of copies of Half-Life Alyx were bundled with Index headset. The Index has been sold out for months & months. I know lots of people waiting to play it on the Index, because it is by far the best VR HMD.

Valve is collaborating with Microsoft & HP on a new PC VR headset, and reportedly collaborating with Apple on making an AR headset. Valve is more interested in cultivating a more open ecosystem that pushes the medium forward.

There will be an entire generation of XR developers who get their start by modding Half-Life Alyx. It's already inspiring what's possible for the next wave of VR games and set the bar for quality & immersion.

To try to reduce down the impact of this game into a single binary number or profit or loss misses the cultural & inspirational impact it has had and will continue to have on the broader XR ecosystem. Perhaps Half Life Alyx will continue to be a loss leader, but it is certainly paving the way for all sorts of other XR & AR devices from Microsoft, HP, & Apple.

[FlipperPA]

I'm really glad I bought an Index long before the Alyx announcement, back in November. Three colleagues of mine had to wait months to get theirs, and one of the three is still waiting.

Don't forget, Valve didn't spend that investment just developing Alyx. They've developed a new SDK (including libraries, API, and hardware controls) for future games. There's nothing on the market anywhere close to the level as immersion one can experience in Alyx (Skyrim VR with mods that took the community thousands of hours to develop is the closest), and that will pay future dividends in other games. That's what made the investment worthwhile: a toolbox for future development, an amazing proof of concept on what is possible in VR, and a huge marketing boost for the platform.

[TonyVT Skarredghost]

I remember having made a similar analysis on Twitter (also tagging you) reaching to similar conclusions. Remember that at the end of Alyx there are the credits with more than 300 people... so probably at least $50M is a reasonable estimate

[Wagner James Au]

I should add a link to that -- can you plz post it here?