"We thought that there would be something that would emerge, because we figured it was a sort of untenable," explains Gabe. "'Oh yeah, we understand that these are the rules now, but it's such a train wreck that something will have to change.'"

Gabe refers to the fact that issuing updates to Xbox 360 games after release cost the developer money and significant changes, requiring large amounts of new content to be downloaded cannot be offered for free, in most cases. This is why much of the content PC gamers get for free is available as paid DLC on the Xbox 360.

Valve had been hoping that Microsoft's position on patching would change following the launch of TF2, allowing Valve to bring all of the new content developed for the PC version to the console. PC players of TF2 know that the current game is wildly different from the version that shipped originally. This is key to Valve's philosophy of games as a service.

Previously, Valve had handled development of The Orange Box for the Xbox 360, choosing to have another developer handle the PS3 port. At E3, Valve announced support for the PS3 and its intention to bring Steamworks, its online framework, and Portal 2 to Sony's console. An Xbox 360 version of Portal 2 is also planned, but console gamers might want to consider the PS3 version since Valve will be allowed to better support the game there.

The rest of the interview covers other topics, including more on Valve mistakenly banning 12,000 Modern Warfare 2 players on Steam. It's definitely worth a read.