It's March 2003 and Gabe Newell looks like he's about to start a shadow-puppet show. Sitting in the conference room at Valve, Newell has raised his right hand and clasped his thumb to his index finger to make a mock mouth. "I've sort of been having this internal conversation with our fans for years," he says while looking at his hand. "So I have to pretend my hand here is a fan and I need to guess what they are going to think of Half-Life 2." Newell goes on to say that he's sick and tired of guessing what the fans will think. He's ready to show them the game and get their reaction. "At E3 I'm finally going to be able to look the fans in the eyes and say, 'OK, what do you guys think?'" he says.

How would Valve unveil the game at E3 2003? At first Newell wanted the team to create an extensive 30-minute demo that would feature Alyx, the main female character, guiding the audience through a science lab that showcased the Source technology. Then, halfway through the demo, the lab would suddenly be attacked and the player would have to escape alongside Alyx. It sounded like a great way to break the fourth wall and show off Valve's character technology. But in the weeks leading up to E3, it became clear there was no time to create such an elaborate demo. "We looked at the cost of doing a demo like that and said, 'No way in hell,'" Birdwell remembers. "If we were shipping September 30, everything that was going to be at E3 had to be something we could ship."

The G-Man opened the E3 2003 demo of Half-Life 2.

The fans at E3 would have no idea that Valve had dramatically scaled back its plans for the demo. In place of the Alyx demo, Valve showed off a number of the proof-of-concept demos, along with a few new snippets of gameplay. The demo started off with everyone's favorite character, the G-Man. Valve even thought up a brilliant way to add some dramatic flair to the demo: At first the G-Man looked as he did in the original Half-Life. Then the image changed to the new photo-realistic character model for Half-Life 2. The contrast between the two character models was a masterstroke--it showed the audience just how far Valve had come in five years.

The outside of the Half-Life 2 theater at E3 2003.

But it didn't matter if Valve thought its demo was cool. Newell was more interested in the fan reaction. As soon as the first E3 demo was finished, he turned to the audience and asked a simple question: Is this a worthy successor to Half-Life? Time and again, the answer was yes. "I can't tell you how much that meant to me," Newell says. "Our fans said, 'We trusted you to do something very cool and exciting and this lives up to our expectations.'" Newell would keep asking the same question for all three days of the show. Every time he'd get the same response.

Half-Life 2 was the buzz of the show. In the weeks following its debut, the Game Critics Awards: Best of E3 2003 awarded it the highly coveted Best of Show award. But just like with any popular demo at E3, competitors and some members of the press remained skeptical about what Valve had shown--especially in light of the promised September 30 ship date.

Competitors claimed that Valve’s City 17 was actually an elaborate façade.

The line of reasoning went like this: If the game really were coming September 30, that meant Valve had to finish the game in the summer. So why didn't Valve let people actually play the game at E3 in mid-May? The physics gameplay looked interesting, but competitors said that it could never actually work in a game like that--it would be a design nightmare to let players have so much control. The skeptics wondered if Valve had hoodwinked the entire industry with an elaborate tech demo that would never become a game. Was City 17 actually a Potemkin village, an elaborate fake town like the one Russian field marshal Grigori Aleksandrovich Potemkin supposedly created to impress Catherine the Great on her tour of the Ukraine in the late 1700s?

Valve had heard all this before--it was sour grapes, it thought. And Newell had just one message for the doubters: We will see you on September 30. Or maybe not. As soon as Newell returned from E3, he took a long, hard look at the team's progress. And he soon reached a heartbreaking conclusion.