Valve is working on Source 2, a successor to its long-running Source engine, studio head Gabe Newell confirmed in a Q&A session with members of 4chan's /v/ board.
Newell also mentioned that a game known as "SOB" did exist as Stars of Blood, but said Valve is no longer working on it.
Asked about the existence of Source 2 (go to 6:07 in the video), Newell said, "We've been working on the engine itself for quite a while." At that point, the audio becomes muffled, but according to the transcript provided by the video's author, Newell added, "We've just been waiting for a game to roll it out with." He also said it's a new engine altogether, not a mere extension of the existing Source technology.
Earlier this year, files discovered in Valve's Source Filmmaker software hinted at the existence of a "next-gen" Source 2 engine.
Later in the nearly hour-long session (scrub to 47:45 in the video), a fan asked about a rumored project called "SOB," concept art of which was "floating around" on the web. Newell did not recognize the rumored name, "Stars of Barathrum"; instead, he gave the name Stars of Blood and characterized it as a "space pirates game," but said, "That never saw the light of day."
Update: As commenters have pointed out, Newell has previously used "Ricochet 2" as a joking stand-in for a future entry in the Half-Life franchise such as Half-Life 2: Episode 3 or Half-Life 3 — in other words, when he mentions a sequel to Ricochet, he is referring to a future Half-Life game. We've edited the original article to reflect this. Thanks, everyone!
