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%'

Gaming IndustrySteamGabe 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%‘When you purchase through links on our site, we may earn an affiliate commission.Here’s how it works.

When you purchase through links on our site, we may earn an affiliate commission.Here’s how it works.

(Image credit: Valve software)

Gabe Newell in a Valve promotional video, on a yacht.

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, alongsideadding a whole bunch of enhancements. It also dropped a two-hour documentary about the making of the game, and the background ofValve’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 - YouTubeWatch On

Half-Life 2: 20th Anniversary Documentary - YouTube

“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.

The biggest gaming news, reviews and hardware deals

“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.

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.

TOPICSValve

TOPICS

More about gaming industryLords of the Fallen studio embraces fear of the DEI boogeyman, says it will not include ‘any social or political agendas’ in its gamesEpic CEO Tim Sweeney says tech leaders are ‘pretending to be Republicans’ to gain favor with Trump, skirt antitrust laws, and ultimately ‘rip off consumers and crush competitors’LatestWormhole is an impeccable arcade revival of Snake that plays like it fell off the back of Derek Yu’s vanSee more latest►

More about gaming industry

Lords of the Fallen studio embraces fear of the DEI boogeyman, says it will not include ‘any social or political agendas’ in its gamesEpic CEO Tim Sweeney says tech leaders are ‘pretending to be Republicans’ to gain favor with Trump, skirt antitrust laws, and ultimately ‘rip off consumers and crush competitors’

Lords of the Fallen (2023) promotional image - very large man with a very large hammer on a very large horse charging a very small man with a very small magic sword

Lords of the Fallen studio embraces fear of the DEI boogeyman, says it will not include ‘any social or political agendas’ in its games

Tim Sweeney

Epic CEO Tim Sweeney says tech leaders are ‘pretending to be Republicans’ to gain favor with Trump, skirt antitrust laws, and ultimately ‘rip off consumers and crush competitors’

LatestWormhole is an impeccable arcade revival of Snake that plays like it fell off the back of Derek Yu’s vanSee more latest►

Latest

Wormhole is an impeccable arcade revival of Snake that plays like it fell off the back of Derek Yu’s van

Wormhole

Wormhole is an impeccable arcade revival of Snake that plays like it fell off the back of Derek Yu’s van

See more latest►

Most PopularThe Sims begins its 25th anniversary celebration next week with a Behind The Sims episode of news and announcementsPath of Exile 2 numberlord spends 16 straight days killing rare monsters to prove that a stat that makes loot better makes better lootPalestinian developer raises more than $200,000 to make Dreams on a Pillow, a game about the horrors of the 1948 NakbaPiranha Games will lay off employees after Mechwarrior 5: Clans ‘performed below projections’Marvel Rivals’ latest update quietly killed the game’s burgeoning mod sceneSorry everyone, Minecraft 2 is cancelled, and it might be our faultTeam Fortress 2 just had the single biggest trade in its history, with ‘the absolute best hat you can get’ going for around $40KIs the new RTX 5070 really as fast as Nvidia’s previous flagship RTX 4090 GPU? Turns out the answer is yes. Kinda.Elden Ring: Nightreign is getting a closed network test, and I’m totally not fuming because PC players aren’t invited to the party, or anythingIf you’re a content creator and gamer looking for a CPU upgrade, this Ryzen 9 9900X deal will get you $90 offAMD is now reportedly making all-American Ryzen 9000 CPU dies at TSMC’s Arizona fab

Most Popular

The Sims begins its 25th anniversary celebration next week with a Behind The Sims episode of news and announcements

Path of Exile 2 numberlord spends 16 straight days killing rare monsters to prove that a stat that makes loot better makes better loot

Palestinian developer raises more than $200,000 to make Dreams on a Pillow, a game about the horrors of the 1948 Nakba

Piranha Games will lay off employees after Mechwarrior 5: Clans ‘performed below projections’

Marvel Rivals’ latest update quietly killed the game’s burgeoning mod scene

Sorry everyone, Minecraft 2 is cancelled, and it might be our fault

Team Fortress 2 just had the single biggest trade in its history, with ‘the absolute best hat you can get’ going for around $40K

Is the new RTX 5070 really as fast as Nvidia’s previous flagship RTX 4090 GPU? Turns out the answer is yes. Kinda.

Elden Ring: Nightreign is getting a closed network test, and I’m totally not fuming because PC players aren’t invited to the party, or anything

If you’re a content creator and gamer looking for a CPU upgrade, this Ryzen 9 9900X deal will get you $90 off

AMD is now reportedly making all-American Ryzen 9000 CPU dies at TSMC’s Arizona fab

HARDWARE BUYING GUIDESLATEST GAME REVIEWS1Best Steam Deck accessories in Australia for 2025: Our favorite docks, powerbanks and gamepads2Best graphics card for laptops: the mobile GPUs I’d want in my next gaming laptop3Best mini PCs in 2025: The compact computers I love the most4Best 14-inch gaming laptop: The top compact gaming laptops I’ve held in these hands5Best Mini-ITX motherboards in 2025: My pick from all the mini mobo marvels I’ve tested1Thank Goodness You’re Here! review2Shiren the Wanderer: The Mystery Dungeon of Serpentcoil Island review3WD Black SN850X 8 TB NVMe SSD review4Ikea Utespelare desk review5Asus ROG Harpe Ace Mini wireless mouse review

HARDWARE BUYING GUIDESLATEST GAME REVIEWS

1Best Steam Deck accessories in Australia for 2025: Our favorite docks, powerbanks and gamepads

A bunch of the best Steam Deck accessories on a blue background.

1Best Steam Deck accessories in Australia for 2025: Our favorite docks, powerbanks and gamepads

Best Steam Deck accessories in Australia for 2025: Our favorite docks, powerbanks and gamepads

2Best graphics card for laptops: the mobile GPUs I’d want in my next gaming laptop

Best graphics card for laptops: the mobile GPUs I’d want in my next gaming laptop

3Best mini PCs in 2025: The compact computers I love the most

Best mini PCs in 2025: The compact computers I love the most

4Best 14-inch gaming laptop: The top compact gaming laptops I’ve held in these hands

Best 14-inch gaming laptop: The top compact gaming laptops I’ve held in these hands

5Best Mini-ITX motherboards in 2025: My pick from all the mini mobo marvels I’ve tested

Best Mini-ITX motherboards in 2025: My pick from all the mini mobo marvels I’ve tested

1Thank Goodness You’re Here! review

Thank Goodness You’re Here review

1Thank Goodness You’re Here! review

Thank Goodness You’re Here! review

2Shiren the Wanderer: The Mystery Dungeon of Serpentcoil Island review

Shiren the Wanderer: The Mystery Dungeon of Serpentcoil Island review

3WD Black SN850X 8 TB NVMe SSD review

WD Black SN850X 8 TB NVMe SSD review

4Ikea Utespelare desk review

Ikea Utespelare desk review

5Asus ROG Harpe Ace Mini wireless mouse review

Asus ROG Harpe Ace Mini wireless mouse review

The biggest gaming news, reviews and hardware deals#

The biggest gaming news, reviews and hardware deals