Gabe Newell says no-one in the industry thought Steam would work as a distribution platform—'I'm not talking about 1 or 2 people, I mean like 99%'

Half-Life 2's 20th anniversary saw Valve doing a Valve: The game received a massive surprise update, adding new commentary and integrating the two episodes, alongside adding a whole bunch of enhancements. It also dropped a two-hour documentary about the making of the game, and the background of Valve's existential legal battle with Vivendi, which features all sorts of digressions into the studio's multifaceted thinking, and the possibly unforeseen consequences: Most notably, the creation of what would become the de facto PC gaming platform Steam.

Steam launched in 2003, initially as a way for Valve to automatically ship updates to players of its existing games. "Gabe [Newell] in particular, he had a pencil sketch of an idea in his head of what would become Steam," says Erik Johnson. "But it was clear with Team Fortress Classic and then Counter-Strike that fundamentally the thing we were really attracted to was the ability to ship content directly to our customers.

"I mean, there was a set of business goals that ended up being part of Steam. But fundamentally it was a bunch of game development goals that it was servicing that was so attractive to us."

Newell may have had some idea of where he eventually wanted this thing to go, but Steam wasn't initially being built to distribute games: Until someone had a lightbulb moment.

"We ended up going out and finding this company called Applied Micrososystems," says engineer Yahn Bernier. "So we ended up hiring most of the original Steam team from that other company to build initially this sort of in-game advertising streaming model but then there was this epiphany that, 'Hey, it's just bits. Why don't we just download whole games this way? You guys go off and do it.'"

Steam would eventually begin selling third-party games in 2005. But well before that point Valve had made the major decision that Half-Life 2, which would release in November 2004 and was easily the most-anticipated PC game of its era, would require Steam to play. Readers of a certain vintage may even remember that, at the time, this got a lot of angry pushback from elements of the PC gaming community, aghast at being forced to install an additional client in order to run a game they'd paid for.

Half-Life 2: 20th Anniversary Documentary - YouTube

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"The decision not just to ship Half-Life 2 with Steam but to actually require Steam, even with the versions that were purchased at retail in a box, was the most interesting decision of all those," says Greg Coomer, who worked with Gabe Newell at Microsoft before becoming one of Valve's first employees. "Because it turned out to be an incredibly important decision for the future of the company, and a lot of us were nervous, and a lot of the people who'd been at Valve for a long time, since the very beginning, were the most nervous about that decision.

"So it was one of the rare exceptions to our [usual] decision-making process, and Gabe had to really step in and say, 'No, actually we're doing it this way.'"

The consequence of this decision was that Half-Life 2 became not only a best-selling smash hit for the company, but one whose very success made it a phenomenal Trojan Horse for Steam as a platform. Steam was a digital storefront that was already installed on your PC when most of us hadn't heard the words "digital storefront" before. Put like that, it almost seems like a fait accompli: But no one at the time, outside of Valve, thought Steam would work.

"It was a very weird time," says Gabe Newell. "I don't think people understand how many times we would go to people and say, 'No, you will be able to distribute software over the internet' and have people say, 'No, it will never happen.' I'm not talking about one or two people. I mean like 99% of the companies we talked to said 'It will never happen. Your retail sales force will never let it happen.'

"But also people would say, 'Users aren't gonna want this... people want physical copies.' There were so many bad faith arguments that were being made. Retail sales is not the goal, right. It's actually an impediment, it's somebody who sits between you and the customer."

This is one of the consistent things about Newell and Valve people generally: Most answers end up back at the user.

Valve's hegemony over PC gaming is one of those facts that elicits strong reactions. Some folk, and they're not wrong, bristle at its sheer dominance, its ability to set the terms for developers, and the control wielded over the PC gaming landscape by one company. Another perspective might be that Steam does have competition, albeit no equals, and if one company is going to be in that position, well, Valve certainly ain't the worst: And does seem acutely conscious of its responsibilities to developers as well as players.

Whether what exists now resembles that "pencil sketch" Gabe Newell had in mind… well, only he knows. But its success can arguably be put down to two facts above others. Valve saw which way the wind was blowing before most everyone else: And it had one hell of a delivery vector ready to go.