"Right now we have to [observe players] simply by watching them and then we have to guess as to how certain things are affecting the player," Newell stated in an essay appearing on Edge. "We want to take that even further in the future," he wrote.
Getting scientific, Newell wrote, "One of the areas that we're really interested in is testing biometrics on player state." Biometrics is the practice of measuring activity in the human body such as heart rate--or, in this case, brain activity.
"There are new technologies where we can wire players up with EEGs and actually have direct exposure to their physical reactions to the games," the Valve head continued. EEG is the technology that measures brain activity by placing electrodes on the scalp. The product of an EEG is usually a chart with spikes and troughs, like a seismometer.
The benefit to Valve is precise knowledge of what works, and what doesn't, when making a game. "We can know for sure of something is actually frightening the player--their heart rate is going up ... appropriate parts of their brains are being activated," Newell asserted.
Concluding, Newell called the possibility "super exciting."
There's a company that does this and sells their services to game companies. I think several have already used them in focus tests.
If anyone has been following this technology lately they would have heard the news about the emotive device which promises to be more advanced than the ocz system currently out. Either way because valve is not in the business of user interface devices and the initial user base for these systems will be small considering the cost, it will be sometime before this technology becomes main stream in my opinion.
Valve would probably be better off not spending to much time on this idea until the user base grows then establishing a defunct standard protocol to interface with the software created by the companies making the product(s). This would provide an interface similar to configuring a keyboard map that would revolutionize and provide a model for future games using these devices.