Around 1999, as Valve started work on Half-Life 2 and the new Source engine, they became concerned about how their contract with Sierra related to IP rights. Valve published additional games through Sierra, including expansions for Half-Life and Counter-Strike. The contract gave some intellectual property (IP) rights to Sierra in addition to publishing control. Valve signed a publishing contract with Sierra Studios in 1997 ahead of the 1998 release of Half-Life.

Steam's success has led to the development of the Steam Machine line of gaming PCs in 2015, including the SteamOS operating system and Steam Controller Steam Link devices for local game streaming and in 2022, the handheld Steam Deck tailored for running Steam games. By 2021, the service had over 34,000 games with over 132 million monthly active users. By 2017, game purchases through Steam totaled about US$4.3 billion, or at least 18% of global PC game sales according to Steam Spy. The service is the largest digital distribution platform for PC gaming, with an estimated 75% of the market share in 2013 according to IHS Screen Digest. The platform also offers other digital content and Valve gaming hardware, including productivity software, game soundtracks, videos and VR headset Valve Index. Mobile apps to access online Steam features were first released for iOS and Android in 2012. Initially developed for Microsoft Windows operating systems, Steam was released for macOS in 2010 and Linux in 2012. Valve released a freely available application programming interface (API) called Steamworks in 2008, which developers can use to integrate Steam's functions into their products, including in-game achievements, microtransactions, and user-created content support.

Users receive automatic game updates, cloud storage for game progress, and community features such as direct messaging, in-game chats and a community market. Steam offers various features, like digital rights management (DRM), game server matchmaking, anti-cheat measures, social networking and game streaming services. It was launched as a software client in September 2003 as a way for Valve to provide automatic updates for their games, and expanded to distributing third-party game publishers' titles in late 2005. Steam is a video game digital distribution service and storefront from Valve.

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