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Steam is a digital distribution platform developed by Valve Corporation, which offers digital rights management (DRM), multiplayer gaming, video streaming and social networking services. Steam provides the user with installation and automatic updating of games, and community features such as friends lists and groups, cloud saving, and in-game voice and chat functionality. The software provides a freely available application programming interface (API) called Steamworks, which developers can use to integrate many of Steam’s functions into their products, including networking, matchmaking, in-game achievements, micro-transactions, and support for user-created content through Steam Workshop. Though initially developed for use on Microsoft Windows operating systems, versions for OS X and Linux were later released. Mobile apps with connected functionality with the main software were later released for iOS, Android, and Windows Phone devices in the 2010s.

The Steam platform is considered to be the largest digital distribution platform for PC gaming, and was estimated by Screen Digest to have 75% of the market space in October 2013.[4] In 2015, users purchasing titles through Steam or through Steam keys from third-party vendors totaled roughly $3.5 billion, representing 15% of the global PC game sales for the year, based on estimations made by the tracking website Steam Spy.[5][6]

By late 2017, the service had over 150 million registered accounts, and had reached a peak of 17.5 million concurrent users. The success of the Steam platform has led to the development of a line of Steam Machine micro-consoles, as well as the SteamOS operating system.
Before implementing Steam, Valve Corporation had problems updating its online games, such as Counter-Strike; providing patches would result in most of the online user base disconnecting for several days. Valve decided to create a platform that would update games automatically and implement stronger anti-piracy and anti-cheat measures. 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, which would only grow with planned Internet expansion in the following years, and recognized that they could deliver game content faster to players than through retail channels.[7] Valve approached several companies, including Microsoft, Yahoo!, and RealNetworks to build a client with these features, but were declined.[8]

Steam’s development began in 2002, with working titles for the platform being “Grid” and “Gazelle”.[9][10] It was first revealed to the public on March 22, 2002, at the Game Developers Conference, where it was presented purely as a distribution network.[11] To demonstrate the ease of integrating Steam with a game, Relic Entertainment created a special version of Impossible Creatures.[12] However, the game was not released on Steam until 2015. Valve partnered with several companies, including AT&T, Acer, and GameSpy Industries. The first mod released on the system was Day of Defeat.[13]

The Steam client was first made available for public beta testing in January 2003 during the beta period for Counter-Strike 1.6, for which it was mandatory to install and use. At the time, Steam’s primary function was streamlining the patch process common in online computer games. Steam was an optional component for all other games. 80,000–300,000 gamers tested the system when it was in its beta period.[13][14] The system and website choked under the strain of thousands of users simultaneously attempting to play the latest version of Counter-Strike.[15] In 2004, the World Opponent Network was shut down and replaced by Steam. The online features of games which required World Opponent Network ceased to work unless they were converted to Steam.[16]

Around that time, Valve began negotiating contracts with several publishers and independent developers to release their products, including Rag Doll Kung Fu and Darwinia, on Steam. Canadian publisher Strategy First announced in December 2005 that it would partner with Valve for digital distribution of current and future titles.[17] In 2002, the managing director of Valve, Gabe Newell, said he was offering mod teams a game engine license and distribution over Steam for US$995.[13] Valve’s Half-Life 2 was the first game to require installation of the Steam client to play, even for retail copies. This decision was met with concerns about software ownership, software requirements, and issues with overloaded servers demonstrated previously by the Counter-Strike rollout.[18] During this time users faced multiple issues attempting to play the game.[9][19][20]

Beginning with Rag Doll Kung Fu in October 2005, third-party games became available for purchase and download on Steam,[21] and Valve announced that Steam had become profitable because of some highly successful Valve games. Although digital distribution could not yet match retail volume, p