Code in Source Filmmaker Confirms Source Engine 2 in Development
Believe it or not, the Source Engine powering all of Valve's games is approaching its ten year anniversary. The engine was designed in a way that allows for updates over the years, so the version powering Portal 2 is superior to the one that originally debuted with Counter-Strike: Source. Even still, an eight year old game engine has to be replaced in favor of something newer at some point in time. It appears that may soon be the case, as the folks over at Valve Time have discovered files for a "next-gen Source 2" engine within the Source Filmmaker. There are more than 60 references hidden in the Filmmaker files, with names like Source, Hybrid, and Source 2 repeated. Valve Time thinks Hybrid is what Source 2 is sitting on as a base, but it could be anything at this point.
Valve does say that "Source is considered the most flexible, comprehensive, and powerful game development environment out there. And it’s about to get even better." That last part could be a major hint that Source 2 is on the way, and maybe this is why Half-Life 2: Episode Three and Half-Life 3 are taking so long. Keep it tuned here for future updates.