Update: While Half-Life "3" may not exist, Valve has just announced a third Half-Life game, a VR game called Half-Life: Alyx due out in 2020.
"There’s something with that third episode that isn’t sitting right with Gabe and other people at Valve," an anonymous alleged Valve insider claims. "Ultimately it just starves to death."
The above is but a snippet of a thorough and intriguing interview published by Game Informer's Andrew Reiner, conducted with an unverified source at Valve (Reiner, while cautious of publishing the interview without verification, does however trust his source) who suggests Half-Life 3 has never existed, no matter how much fans of the series may wish otherwise.
The source even suggests the elusive and much-anticipated third series instalment could have been a live-action choice-driven game or an RTS, had certain Valve employees seen their iterative ideas through to completion. The source chalks this up to the developer's fluid structure and in-house culture—something which has seen several developers working on projects they hoped would go onto become the next Half-Life, however without support from the powers that be, not least Gabe Newell, failed to get off the ground.
Assuming the source is credible, Reiner's interview is absolutely worth reading in its entirety. Below is how the source responds to direct questions about the prospect of Half-Life 3, and the possibility of concluding Half-Life 2.
"I don’t think there will be any more. But at any given moment, they make decisions as they come. If some people within Valve make something that they collectively feel is exciting, then it will happen. That’s going to be hard for that to happen now," says Reiner's source. "Every time a Half-Life project gets some gravity and then collapses, it becomes harder for the next one to start up. Because the business changes so much, and there are so many other things to do, it just gets harder and harder. It’s one of those things they’ll always have to accept.
"People are going to harass them for more Half-Life. The idea of delivering a third episode of Half-Life 2, that’s dead. There’s no universe where that will happen. I think there is a universe where a standalone thing could come together to fill in that hole, but that’s tough."
Speaking to this point, Reiner questions why Valve doesn't hand development over to a third party, to which the source suggests doing so risks either upsetting fans by way of neglecting players, or by ultimately releasing a lesser game. Reiner counters by suggesting Valve will forever continue to be harassed for more Half-Life by adopting this approach.
"That’s why they won’t talk about it anymore," the source responds. "Every time they talk about it, the hunger comes back. That’s why they ignore it. The pain subsides with time."
Again, Reiner's interview is worth reading as a whole as, again assuming it's legitimate, it offers some valuable insight into how Valve works, and perhaps presents an argument why we might be best putting Half-Life 3—as an idea and/or possibility to bed.
If you think that's giving up too easy, then you should definitely check out our Half-Life 3 unconfirmed collection which gathers every rumor, hoax, and leak which has surfaced since the conclusion of HL2.