It wasn’t as big as Unreal, Unreal was one of the largest engines used at the time. Source was hyped up because it’s physics engine was something that hadn’t been seen to that degree of realism before. Hell, HL2 is basically a glorified demo for the Source engine’s capabilites, the entire first 2-3 hours being physics examples. But that’s also it’s problem, the physics can make things rather taxing on system resources and also were prone to unexpected outcomes you couldnt really account for, such as collision with a large number of objects. Source was great, for HL2, a game tailor made for it. But other devs had problems translating that USP into other games and the engine, while good, faced an major battle for devs who weren’t familiar with it compared to Unreal.
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