"This time the stakes are different."

The original Half-Life, released in 1998.

It was with those six words that Gabe Newell launched the development of Half-Life 2 in June 1999. Yes, you read that right--1999, only six months after the original Half-Life shipped. For Valve there was never a question about whether there would be a sequel to Half-Life. The question was how the company could top--or even match--what was being heralded as one of the best PC titles of all time.

It was, to be sure, a long way from where Valve started back in 1996. "Last time the fact that a bunch of ex-Microsoft operating-systems guys could get together and ship a game--any game--was a cool story," Newell told the team in reference to Half-Life. "This time we have to follow up the best PC game of all time and do it in a way that doesn't completely burn out the entire staff."

Valve certainly could have created a quick and dirty sequel to capitalize on Half-Life's success. Newell, however, made it clear that wasn't an option. No, Half-Life 2 had to be something much more ambitious. It had to redefine the genre. To innovate where other games hadn't. To be a game that gave fans a totally new first-person shooter experience. "What's the number one thing that drives us?" Newell says. "Well, I just hate the idea that our games might waste people's time. Why spend four years of your life building something that isn't innovative and is basically pointless?"

Making a revolutionary sequel wouldn't be easy. So, to increase the chances of success, Newell told the team that, at least initially, they had a virtually unlimited budget and absolutely no time pressure. "There's going to be no producer making bad decisions about what has to happen on this project," Newell told the team. All the money Valve made on the original Half-Life would be rolled into the sequel. And since Newell was well-off from his days at Microsoft, he was willing to personally endow the development if necessary. "The only pressure we have is to build a worthy sequel to Half-Life," he told the team.

Alyx Vance, one of the in-game characters created for Half-Life 2.

The experimentation and brainstorming began in the summer of 1999. Ideas were discussed for weeks and thrown up on the whiteboard. What if the game included voice recognition so you could actually talk to characters? What if Half-Life 2 was a buddy story where you and Barney--the AI security guard from the original--worked as a team for the entire game?

Eventually the team crystallized their thoughts around the key concept of making both the characters and the world in Half-Life 2 more believable and interactive. The original Half-Life was heralded for many things, but players particularly appreciated the characters and storyline. "It sounds really goofy, but what we wanted to do was broaden the emotional palette in games," Newell says. "We wanted to try and create characters that mattered and have the player feel a strong attachment to them."

Physics-based gameplay, like using a radiator as a shield, was a design goal for the team.

Valve also wanted to bring the world to life. Interactive environments have long been synonymous with first-person shooters, but in the past the interactivity has been limited to flushing a toilet or getting a can of Coke out of an in-game vending machine. Valve wondered if it could create a world that was even more interactive. "The inherent promise of games is that you are an agent in this world and you can affect things," Newell says. So an idea went up on the whiteboard: What if Half-Life 2 used physics, AI, and game design to push the boundaries of interactivity? The team imagined scenarios like letting a player pick up a radiator in an apartment building to use as a shield against an enemy.

By the end of the summer it became clear that Valve would need a new game engine to pull off its ambitious goals. (Valve licensed id Software's Quake engine for the original Half-Life). While Valve looked at licensing an engine for the sequel--such as id's Quake III engine--the team concluded that no outside technology was a good match for Valve's ambitious plans. "Id's stuff is always cutting-edge, but this time we wanted to cut some different edges," says Valve cofounder Mike Harrington. Valve, it seemed, would have to build its own engine from scratch. So while Half-Life 2 may have started production in mid-1999, creating a new engine meant that the game would take at least three years to complete.