Timeline of events
|2002||Announcement and beta release|
|2005||First publisher partnership|
|2007||Steam Community launched|
|2010||Mac OS X client released|
|Translation Server opened|
|2011||Steam Workshop launched|
|2012||Steam mobile apps released|
|Steam for Schools launched|
|Steam Greenlight launched|
|Big Picture Mode launched|
|Productivity software added to catalog|
|2013||Linux client released|
|Family Sharing launched|
|2014||In-Home Streaming launched|
|Steam Music launched|
|Discovery 1.0 update|
|2015||Broadcast streaming launched|
|Steam Machines released|
|Movies/TV purchases/renting added to library|
|Discovery 2.0 update launched|
|2017||Steam Direct launched|
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. Valve approached several companies, including Microsoft, Yahoo!, and RealNetworks to build a client with these features, but were declined.
Steam's development began in 2002, with working names for the platform being "Grid" and "Gazelle". It was publicly announced at the Game Developers Conference event on March 22, 2002, and released as a beta the same day. To demonstrate the ease of integrating Steam with a game, Relic Entertainment created a special version of Impossible Creatures. Valve partnered with several companies, including AT&T, Acer, and GameSpy. The first mod released on the system was Day of Defeat.
Between 80,000–300,000 players participated in the beta client before its official release on September 11, 2003, for which it was mandatory to use with Counter-Strike version 1.6. The client and website choked under the strain of thousands of users simultaneously attempting to play the game. At the time, Steam's primary function was streamlining the patch process common in online computer games, and was an optional component for all other games. In 2004, the World Opponent Network was shut down and replaced by Steam, with any online features of games that required it ceasing to work unless they converted over to Steam.
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 games. 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. 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. During this time users faced multiple issues attempting to play the game.
Beginning with Rag Doll Kung Fu in October 2005, third-party games became available for purchase and download on Steam, and Valve announced that Steam had become profitable because of some highly successful Valve games. Although digital distribution could not yet match retail volume, profit margins for Valve and developers were far larger on Steam. Large developer-publishers, including id Software, Eidos Interactive, and Capcom, began distributing their games on Steam in 2007. By May of that year, 13 million accounts had been created on the service, and 150 games were for sale on the platform. By 2014, total annual game sales on Steam were estimated at around $1.5 billion.