The story of Steam: How it became one of the biggest known names in the gaming industry

Steam is one of the biggest online game marketplace which most gamers are aware of. However, this success didn’t come overnight and is a result of years of dedication to the gaming community.

At the moment, Steam holds over 50,000 games from various categories, which players can access and buy. However, the platform had its humble beginning with first-party titles like Half-Life and Counter-Strike franchises. In fact, it took quite some time before Steam started selling games from other third-party developers and slowly became a standard.

The platform completed its 20-year anniversary in early September 2023 and marked a crucial milestone. Thus, we have gathered all the required information on how Steam became one of the biggest giants in today’s gaming industry.

The idea behind Steam – How it started

Steam is owned by Valve Corporation, which was founded by former Microsoft employees Mike Harrington and Gabe Newell in 1996. After creating the new organization, the duo went ahead and released Half-Life in 1998, which was a significant success.

With each passing year, the organization started growing further and went on to release other IPs. However, as the list went on increasing, Valve decided to create their own client software called Steam in September 2003. This client would give users automatic updates to their first-party games and provide a seamless experience.

In 2004, Valve released Half-Life 2 which was made available on the platform digitally for the first time. Moreover, players were required to install the Steam Client on their system to play the retail copies of the title as well. This implementation caused players to face issues when trying to play the game on release. In fact, this issue was common with their Counter-Strike franchise as well.

The next step – Steam makes it big in the gaming industry

While first-party games were the bread and butter of the platform, Steam opened arms to third-party games for the first time in 2005. Although the company took such a step with a positive mindset, profits from retail sales were still unmatched. Moreover, the lack of a strong internet connection during the early years also led to failures.

As time progressed, many publishers like Dios Interactive, Capcom, and others started to distribute their games on Steam. This move led Steam to gain over 13 million accounts and slowly increase its library of titles. With the sudden boom in popularity among gamers, publishers like Ubisoft, Electronic Arts, Activision, Take-Two Interactive, Sega, and more joined the list in 2008.

Steam was also promoted by AMD ATI, as they provided free copies of Half-Life 2: Lost Coast and Deathmatch to Radeon graphics card owners. Nvidia followed in AMD’s footsteps in 2008 by providing free copies of Portal: The First Slice to owners of their graphics cards. As years followed, Steam became a mandate for various popular titles by the year 2009.

Hurdles faced by the digital game distribution service and redemption

In 2011, Electronic Arts became the first publisher to pull away titles from Steam due to restrictive service terms. To release further titles in the future, EA developed their own client called Origin, where they released Mass Effect 3 in 2012. While the major pull away was negative for the company’s image, the founder Gabe Newell stated:

We have to show EA it’s a smart decision to have EA games on Steam.

In later years, Ubisoft made it a mandate that players require Uplay to launch their games via Steam. While this decision worked well for both sides, Ubisoft decided to take the same steps as Electonic Arts did in 2011. Thus, in 2019,  Ubisoft officially declared that they wouldn’t be selling their IPs on Steam, and released Tom Clancy’s Division 2 independently. However, readers should note that Ubisoft took this decision because of revenue split issues during that year.

Due to Steam’s popularity and considering how much gamers relied on it, pulling away from the platform made EA and Ubisoft face a massive drop in sales. Moreover, since games from numerous different publishers were available on Steam, users liked how it kept all their games in one place. Hence, they usually avoided purchasing the games on different platforms as it was confusing and cumbersome.

In 2020, Electronic Arts ended up returning to Steam and started selling their titles there again. Moreover, Electronic Arts also made their EA Play subscription model available on the platform and started a new era. Similarly, Ubisoft was forced to make the same decision as EA, and 2022 marked their return to the platform.

However, quite unfortunately Steam has an active problem of having cybercriminals who use the platform for their benefit. Although Valve has tried its best to deal with the issue, such problems plague the platform to this day.

Increase in business with trading on Steam Marketplace generating revenue

Other than game sales, Steam also makes a large amount of money through community market sales. The virtual trading platform on Steam allows users to trade in-game items through Steam Wallet. These items have varied prices and users set their own prices according to rarity.

To benefit from such an exchange, Steam takes a 5% cut from each item sold via their platform. Thus if an item is sold at a price of $50, Steam takes $5 as platform charges. Thus, the seller will receive $45 in their Steam Wallet, which cannot be transferred into bank accounts. With millions of users actively trading on the platform, Valve benefits quite a lot through their virtual trades. Sometimes there can be game-specific trade rates as well, for which items can be marked up to a 10% hike.

However, there are certain controversies surrounding the community market. Sometimes the trading feature is used to transfer illegitimate money through laundering. Such users could use the in-game Steam Wallet money to purchase Steam Gift cards and sell them online for real money.

Steps had been taken by Valve in the past to mitigate such problems. However, even to this date, these types of problems remain valid and Steam continues to be an active platform for cybercriminals. Naturally, such issues cause the platform to lose its reputation time and again.

Valve extending its business in hardware and success with its handheld

Valve had been focused on being an online platform for games until the organization decided to penetrate the hardware market in 2015. The gaming company released its first-ever Steam Machine console with a controller in 2014. However, due to its high pricing and unreliability as a platform, it soon lost its charm and ended as a failure.

Even though the console was a failure in almost everyone’s eyes, Valve didn’t stop there. In 2016, Steam partnered up with HTC to create their own VIVE VR headset which was revolutionary during that time. While being revolutionary, the lack of VR-based games didn’t quite support its pros and didn’t get much success.

However, the investment in VR-based hardware turned out to be a success with Valve Index in 2019. This success was possible because of its independent finger-tracking controllers that allowed for a true VR experience. This feature made it a no-brainer amongst competitors and pushed Valve’s success with hardware sales.

Marking that success, Valve focused on creating a new revolution in gaming by creating their very own handheld console. Handheld consoles have been popular through generations, however, Nintendo has been dominating the market in recent years with their Switch console.

Gamers had the option to play PC games on handheld consoles like Ayaneo, but they were expensive. Thus, by making Steam Deck affordable for gamers, Valve quickly captured that market from 2022 onwards.

With this recent success, Valve is currently working hard to deliver new quality products. Leaked sources suggest an improved Valve Index device to be released later in 2023, which fans are looking forward to. Moreover, it also opens the possibility of better handheld devices in the future as well, but not as soon as 2024.

Why does Steam remain to be close to the hearts of gamers globally?

Steam has been around for over two decades and continues to grow daily. Naturally, this made gamers trust the platform, which in turn increased its popularity. Moreover, Steam also makes every transaction hassle-free and allows gamers to buy whatever game they wish to play.

Another reason for Steam’s success is the obsoletion of CDs and DVDs, which were valid forms of media storage in the past. Thus, with the digitization of the gaming industry Steam began growing exponentially and soon became a universal hub for all gamers. Moreover, Steam ventured into the digital game store journey long before others which helped Valve create a monopoly.

Even though alternative websites like GOG, Epic Games, and others exist, none could match the popularity of Steam on the PC Platform. However, the game subscription system from competitors has proved to be a new risk for the platform. For instance, Xbox Game Pass turns out to be beneficial for players as it allows them to play multiple games on their devices at a fraction of the cost.

This change in the industry is stirring the question of whether Steam will follow a subscription system in the future. The likelihood of that happening remains low as the Steam market consists of more than 50,000 games. However, if that happens, Steam might mark up its price compared to its competitors to actually benefit from it.

With all that said, we are sure that Steam will remain a relevant powerhouse in the PC gaming industry for years to come. If you liked reading this article, do give us a follow for similar content. You can also click this link to go to our main hub.