Valve is in the process of developing three VR games. And these won't just be small free VR experiments, either.

The next generation of HTC Vive controllers.

"Right now we're building three VR games," Valve founder Gabe Newell confirmed to Eurogamer during a media roundtable at the studio's Bellevue, Washington office.

"When I say we're building three games, we're building three full games, not experiments," he later clarified when asked about Valve's free HTC Vive prototype The Lab.

While Newell wouldn't say anything about the games themselves, he did note that they're being built in both Source 2 and Unity.

"One of the questions you might be asking is 'Why in the world would you be making hardware?'" Newell continued. "What we can do now is we can be designing hardware at the same time that we're designing software.

"This is something that Miyamoto has always had. He's had the ability to think about what the input device is and design a system while he designs games. Our sense is that this will actually allow us to build much better entertainment experiences for people."

Newell insisted that VR isn't a gimmick, but rather a completely new language in the realm of virtual experiences. "It feels like we've been stuck with mouse and keyboard for a reeeaaally long time and that the opportunities to build much more interesting kinds of experiences for gamers were there, we just need to sort of expand what we can do. But it's not about being in hardware, it's about building better games. It's about taking bigger leaps forward with the kinds of games that we can do."

In other words, Newell believes that VR needs to offer something that cannot be obtained elsewhere. "VR is not going to be a success at all if people are just taking existing content and putting it into a VR space," he said. "One of the first things we did is we got Half-Life 2 and Team Fortress running in VR, and it was kind of a novelty. That was purely a developer milestone, but there was absolutely nothing compelling about it, the same way nobody's going to buy a VR system so they can watch movies."

Basically, it doesn't sound like Valve is going to repackage its older titles with some VR implementation at a premium price. Whatever the Half-Life studio is cooking up sounds a lot more ambitious than that.

These are more comfortable than they look.

The downside to Valve's ambition is that it is not going to come cheap. Newell isn't interested in what low-end VR can do. He wants to see what the cutting edge kit is capable of. Because in the end, it doesn't matter how affordable VR headsets are if there isn't a strong reason to acquire one.

"If you took the existing VR systems and made them 80 per cent cheaper there's still not a huge market, right? There's still not an incredibly compelling reason for people to spend 20 hours a day in VR," Newell stated. "Once you've got something, the thing that really causes millions of people to be excited about it, then you start worrying about cost reducing. It's sort of the old joke that premature cost reduction is the root of all evil."

One of Newell's boldest predictions about VR is that its display tech will improve immeasurably in the next two or so years. "We're actually going to go from this weird position where VR right now is kind of low-res, to being in a place where VR is actually higher res than just about anything else, with much higher refresh rates than you're going to see on either desktops or phones," he prophesied. "You'll actually see the VR industry sort of leapfrogging pretty much any other display technology in terms of those characteristics. It's probably not obvious from the first generation of products, but you'll start to see that happening like in 2018-2019."

Despite all this, Newell is humble in his predictions. The Valve founder freely admits that he was completely wrong about the potential of Nintendo's hardware, twice.

"You can always be surprised, right? Personally, I thought the DS was kind of stupid," Newell recalled of his initial impressions. "It was totally wrong. I thought Sony was going to crush Nintendo in that generation of handheld devices. I hadn't worked on it. I hadn't tried to design any games for it. And clearly the DS ended up being the winner.

"The flipside was the first time I played Wii Sports (to continue to use Nintendo as an example) I was like 'Oh my god! There's so much opportunity! There's so much potential here that we're all going to go discover!' Then it turned out that Wii Sports had pretty much nailed it and that was it."

Newell isn't afraid of failure, a philosophy he and his colleagues bring up multiple times throughout the meeting. "If you're not failing then you're probably not exploring the potential space wide enough. We're sort of optimistic, right? We think VR is going right. It's going in a way that's consistent with our expectations. We're also comfortable with the idea that it may turn out to be a complete failure, simply because if you're not trying to do things that might fail, you're not actually probably trying to do anything very interesting at all."