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Prior to the announcement of Steam, Valve found that Sierra had been distributing their games in PC cafes, which they claimed was against the terms of their contract, and took Sierra and their owners, Vivendi Games, to court in 2002.
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In 2002, Valve president Gabe Newell said he was offering mod teams a game engine license and distribution over Steam for US$995. The first mod released on the system was Day of Defeat. Valve partnered with several companies, including AT&T, Acer, and GameSpy. To demonstrate the ease of integrating Steam with a game, Relic Entertainment created a special version of its game Impossible Creatures. The Steam platform was publicly announced at the Game Developers Conference event on March 22, 2002, and released for beta testing that day. Valve began its own platform development in 2002, using the working names "Grid" and "Gazelle". They approached several companies, including Microsoft, Yahoo!, and RealNetworks, to build a client with these features, but were declined. Through user polls at the time of its announcement in 2002, Valve also recognized that at least 75% of their users had access to high-speed Internet connections-a trend that would continue, with planned broadband expansion-and realized they could deliver game content faster directly to players than through retail channels.
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They decided to create a platform that would update games automatically and implement stronger anti-piracy and anti-cheat measures. Valve was looking for a better way to update its published games, as providing downloadable patches for multiplayer games resulted in most of the online user base disconnecting for several days until players had installed the patch. The two companies agreed on a new contract by 2001, removing Sierra's IP rights and giving Valve rights to digital distribution of its games. Around 1999, as Valve started work on Half-Life 2 and the new Source engine, they became concerned about how their contract with Sierra related to IP rights. Valve published additional games through Sierra, including expansions for Half-Life and Counter-Strike. The contract gave some intellectual property (IP) rights to Sierra in addition to publishing control. Valve signed a publishing contract with Sierra Studios in 1997 ahead of the 1998 release of Half-Life.
Steam's success has led to the development of the Steam Machine gaming PCs in 2015, including the SteamOS operating system and Steam Controller Steam Link devices for local game streaming and in 2022, the handheld Steam Deck tailored for running Steam games. By 2021, the service had over 34,000 games with over 132 million monthly active users. By 2017, game purchases through Steam totaled about US$4.3 billion, or at least 18% of global PC game sales according to Steam Spy. The service is the largest digital distribution platform for PC gaming, with an estimated 75% of the market share in 2013 according to IHS Screen Digest. The platform's storefront also offers other digital content and Valve gaming hardware, including productivity software, game soundtracks, videos and VR headset Valve Index.
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Mobile apps to access online Steam features were first released for iOS and Android in 2012. Initially developed for Microsoft Windows operating systems, Steam was released for macOS in 2010 and Linux in 2012. Many game publishers began distributing their titles on Steam that year. Valve released a freely available application programming interface (API) called Steamworks in 2008, which developers can use to integrate Steam's functions into their products, including in-game achievements, microtransactions, and user-created content support. Steam client's functions include game update automation, cloud storage for game progress, and community features such as direct messaging, in-game overlay functions and a virtual collectable marketplace. Steam offers various features, like digital rights management (DRM), game server matchmaking with Valve Anti-Cheat measures, social networking, and game streaming services.
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It was launched as a software client in September 2003 to provide game updates automatically for Valve's games, and expanded to distributing third-party titles in late 2005. Steam is a video game digital distribution service and storefront from Valve.
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