Half-Life 2 held hostage?

Court filings show VU Games has the right to sit on finished Half-Life 2 code for up to six months. Could it be deja vu all over again?

As part of GameSpot's ongoing look into the two-year-old copyright infringement case that pits business partners Valve Inc. and Vivendi Universal Games against each other in US District Court, additional documents uncovered this week reveal an interesting ace up VUG's sleeve.

In court filings dated August 27, 2004, VU Games' senior vice president and deputy general counsel Eric Roeder entered the following statement into the record.

"Valve has announced that it will deliver a release candidate version of Half-Life 2 (HL2) (a game required under the 2001 SPA) to Sierra/VUG within the next few weeks. If Valve delivers a release candidate version that complies with the contract and is a Final Milestone, then VUG will have six months to release the product under the 2001 SPA. Valve is pressing VUG to release the product early within that six month window, and its representatives have made a number of public statements without our consent or concurrence that the product will be published and released to the general public in September of this year."

The statement's implication is that VUG, angry with Valve's "public statements," could sit on Half-Life 2 for up to six months. But would VUG use this six-month window as leverage to force Valve to back down from demands contained in its original August 14, 2002 lawsuit?

Previously, VU Games found itself in the center of a similar conflict. At the end of September 2003, Interplay announced that it was terminating its distribution deal with VU Games, accusing the publisher of nonpayment of $3 million and failing to live up to the terms of its software publishing agreement for the console role-playing games Fallout: Brotherhood of Steel and Baldur's Gate: Dark Alliance II.

Then, in October, Interplay announced Fallout: Brotherhood of Steel had gone gold. Interplay CEO Herve Caen went so far as to state that Interplay would distribute the two games itself, to make sure games were on retailer shelves for the all-important holiday season. "[Retailers] already know the titles are coming out," Caen told the Orange County Register. "Profitability is contingent on the fourth quarter," Caen concluded.

Then, it was reported that VU Games was considering an injunction against Interplay to prevent it from distributing the games itself. While Brotherhood of Steel languished in retail limbo, nary a peep was heard about the status of Dark Alliance II. Then, in November, the two announced they had suddenly resolved their issues. "We are pleased to have come to an understanding with Interplay and look forward to the upcoming launch of Fallout: Brotherhood of Steel," said Philip O'Neil, VUG's then senior vice president of sales and marketing.

However, the "understanding" VU Games' and Interplay reached didn't include Caen's wishes to release Brotherhood of Steel and Dark Alliance II in the fourth quarter. As it turned out, both titles failed to appear on shelves until the following year: Fallout was eventually released on January 14, 2004, with Dark Alliance hitting retail the following week. Sales of Dark Alliance were lackluster, while Brotherhood of Steel was both a critical and commercial disappointment.

Could a similar scenario befall Half-Life 2? "It’s a game of chicken the way I see it," said one industry observer. "VUG could hold HL2 hostage for 6 months (or threaten to) if they want to force Valve to give in to demands. But Valve knows VUG needs the revenue."

According to the two companies' current software publishing agreement, Valve cannot release the game via Steam until the retail version is brought to market by VU Games. That point was confirmed by Valve director of marketing Doug Lombardi who said, "Half-Life 2 will be made available to customers who purchase via Steam at the same time it is made available at retail."

When asked if VUG could be targeting a "late-cycle" release date for Half-Life 2, Lombardi said, "We've been asking, but Vivendi has refused to communicate an expected retail release date for Half-Life 2." Additionally, Lombardi clarified Valve's perspective when it came to the company's desire to get the game into the hands of gamers. "We delivered the first release candidate last week, and hope to deliver the final version very soon," Lombardi said. For its part, VU Games declined GameSpot's requests for comment.

In other developments in the Valve versus VUG lawsuit, the judge hearing the case in District Court pushed the cutoff date for the two sides to present relevant documents (Discovery) from October 8, 2004, to December 31, 2004.

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