Havok is a company that licenses the physics middleware used in Source games. The original engine licensed by Valve, Ipion Virtual Physics (IVP), was acquired by Havok in 2000 with the original hefty license fees intact. It is now a legacy product superseded by Havok's in-house middleware suite. Havok was acquired by Microsoft in 2015.
IVP was initially licensed for an estimated $50,000-$60,000 per title. The licensing cost for third-party Source games formerly was $25,000 per title, and only applies to commercial games and/or mods[confirm].
As of 2021, the licensing cost for use with Valve engines has been waived in an agreement between Valve and Microsoft (the parent company of Havok). The license is now free.