In the early 2000s, Valve was facing significant challenges in supporting its growing portfolio of online games – particularly Counter-Strike, which had become a massive hit. Keeping players up to date with patches was cumbersome, often requiring them to manually download updates from various servers. This fragmented process led to compatibility issues, frustrated players, and a high barrier for maintaining game integrity.

To solve this, Valve envisioned a centralized platform that could automate game updates, enforce anti-cheat mechanisms, and help fight piracy.

The idea was radical at the time: a persistent, always-online distribution and maintenance platform for PC games. Surprisingly, the goal wasn’t initially to sell games – Steam’s commercial side came later. At the start, Valve just needed a better way to deliver software.

“We went around to everybody and asked ‘Are you guys doing anything like this?’ And everyone was like ‘That’s a million miles in the future… We can’t help you.'”

Recognizing the potential scale of such a project, Valve sought out technology partners. In a 2008 interview with GamesIndustry.biz, Doug Lombardi, Valve’s VP of Marketing, recalled their efforts: “We went around to everybody and asked, ‘Are you guys doing anything like this?'” The company reached out to major players like Yahoo and Microsoft – anyone they thought might have the infrastructure or interest to co-develop the platform.

But the response was uniformly dismissive. “‘That’s a million miles in the future… We can’t help you,'” Lombardi remembered being told. Cloud services and digital distribution were still emerging concepts, and few companies foresaw how transformative they would be for the gaming industry.

Left with no willing partners, Valve decided to go it alone. Development on what would become Steam began in 2002. The platform launched officially in 2003, with up to 300,000 users testing the service during its beta phase. It debuted alongside Counter-Strike 1.6, marking the beginning of mandatory online updates for Valve titles.

Also read: 20 Years of Steam: From Half-Life 2 to the Steam Deck

Steam started modestly, but its impact grew rapidly. Initially criticized for bugs, forced updates, and requiring users to be online, Steam gradually won over gamers and developers alike with its convenience and robust infrastructure. By 2015, Steam generated more than $3.5 billion in game sales, supported thousands of titles, and saw over 12.5 million concurrent users during peak times.

By 2017, that figure had increased to approximately $4.3 billion. In 2019, Steam reported around 90 million monthly active users, and by 2020, it surged to 120 million monthly users during the pandemic. Despite rising competition from platforms like the Epic Games Store, Steam remains the dominant force in PC digital game distribution.