"But seriously, shizzle aside, the Portal demo blew our minds. In the demonstration, Newell walked us through the concept. I'll back up a step. If you've played or heard of Humanhead's Prey, then you know the game offers organic portals throughout a giant sentient alien ship. The portals are dimensional doors into different areas in the ship, and they're graphically and conceptually well implemented and work seamlessly. They're also stationery. In Portal, a seemingly independent game that ships with the PC version of Half-Life Episode 2, and the bundle of Half-Life 2, Episode 1, 2, and Team Fortress 2 on Xbox 360 and PS3, players use a tool that creates portals on the fly. Yes -- a gun that creates instant openings through walls that transport you in the bat of an eye to another place."

"On top of Source's new cinematic physics feature, the engine has also been updated with soft particles and a few other minor tweaks. Gabe Newell did mention that Episode Two will feature not only new environments (one of which being giant outdoor spaces) and creatures (ala the tripods), but new weapons as well."

2:26 Valve's Gabe Newell is now on the stage to show us an updated trailer for Half-Life 2: Episode 2. There are some new images of a strider and smaller walker-like enemies decimating a group of human fighters in the forest. Otherwise, this is pretty much the same trailer we saw at the end of Episode 1.

Newell talks about getting players out of City 17 in the next episode (duh), as well as giving them new weapons and new enemies to use them against. Looks like the Source engine will be getting a lot of upgrades in Ep 2. A "cinematic physics" system is coming from former Weta Digital employee Gray Horsfield, along with new particle systems, better foliage, and more.

2:34 Newell's gone on to discuss the episodic-gaming business model. Short version: Valve likes it. It will even let them explore new types of gameplay in a new upcoming game called Portal (which seems to be a working title). It looks like they took the portal concept from Prey and slapped it on a gun--you can shoot them into walls and floors to solve all kinds of crazy puzzles, teleporting objects around and stuff. Looks like a total mindbender.

TEAM FORTRESS 2. WHERE DID THIS COME FROM? Hey, they're still making it! It's got a totally exaggerated, crazy art style now. Looks a little like Spy vs. Spy or No One Lives Forever, kind of a '60s spy feel. It's going to be the included multiplayer mode in Episode 2! Class-based, etc. You know the drill. Great news for shooter fans. We all thought this game was dead years ago.

And hey, Half-Life 2: Ep 2 will ship for Xbox 360 and PS3 simultaneously with the PC. The console games will basically include all of the HL2 back content, so you'll get everything on there that you can get on the PC. Who expected all this Valve news?