Rumors and facts about the contents of Half-Life 2: Episode 3 and why it was never finished have circulated for years, but a new documentary released for Half-Life 2's 20th Anniversary is particularly revealing, showing us a glimpse of unfinished Episode 3 guns and enemies—including an ice ray that had "kind of like a Silver Surfer mode"—and getting a few of its developers to explain why it was never finished.
I couldn't figure out why doing Episode 3 was pushing anything forward.
Gabe Newell
For the uninitiated, Half-Life 2 was famously followed up with two episodic expansions that were going to form a trilogy, but after Episode 2, Valve abandoned the Half-Life story for 13 years, only picking it up again in 2020 with VR game Half-Life: Alyx. Since then, speculating about Episode 3, or the fabled Half-Life 3, has become a cherished PC gaming forum pastime.
What happened to Episode 3 is no big surprise: The gist is that they didn't know how to push the game design forward enough to make it feel worthwhile to them. That ice gun was apparently not up to Valve's standards of innovation, nor were the blob enemies that use Portal tech. In the documentary, Half-Life 2 level designer David Riller says that they were experiencing "element fatigue" and needed to "go bigger or do something else."
"I think we had really explored a lot of what made sense in the Half-Life universe and setting," Riller said. Writer Marc Laidlaw echoed that feeling, noting that even Arkane was struggling to do new things in its canceled Ravenholm spin-off.
When Left 4 Dead needed help shipping, the Episode 3 team paused work on the next Half-Life campaign to pitch in, and like a hobby woodworking project that gets put down for just a moment and winds up collecting dust for decades, that was its ultimate demise.
Engineer David Speyrer says that it was "tragic and almost comical" that, after Left 4 Dead was out the door, they felt like they'd missed their opportunity to finish Episode 3 and needed to make a new engine if they were going to continue the series.
"That just seems in hindsight so wrong," Speyrer said. "We could've definitely gone back and spent two years to make Episode 3."
But it doesn't seem like there's complete agreement at Valve on whether they should've just finished Episode 3 to conclude the story or not. When Valve founder Gabe Newell addressed the subject, he said that completing Episode 3 just to finish the story would've been cheating.
"You can't get lazy and say, 'Oh, we're moving the story forward,'" said Newell. "That's copping out of your obligation to gamers. Yes, of course they love the story. They love many, many aspects of it. But saying that your reason to do it is because people want to know what happens next, you know—we could've shipped it, it wouldn't have been that hard. The failure, my personal failure was being stumped. I couldn't figure out why doing Episode 3 was pushing anything forward."
The documentary concludes with the upside: After not finishing Episode 3, Valve's done a lot of other stuff, like release Dota 2 and the Steam Deck. But for the Half-Life fans unsatisfied by that takeaway, there is an extremely meager tease (classic Valve) about the future of Half-Life at the end: just Newell saying that, sure, yeah, there are opportunities to do more Half-Life stuff.
You can watch the Half-Life 2 Anniversary Documentary on YouTube, and Valve's also released a big patch to the game itself that adds in-game commentary.
