Is Steam owned by Valve? Yes!
As an avid PC gamer and industry commentator, I can definitively say that the immensly popular Steam digital distribution platform is owned and operated by legendary game developer Valve Corporation. Read on as I provide the full story behind Steam‘s origins at Valve, how it became a monopolistic juggernaut, and what Valve‘s ownership means looking ahead.
The History of Steam and Valve
Believe it or not, Steam started life as an auto-updating program for Valve‘s own game titles like Half-Life and Counter-Strike in the early 2000s. According to a 2022 retrospective on Steam‘s growth in PC Gamer magazine, Valve founder Gabe Newell wanted an easy way to deploy patches and updates to their games, which at the time had to be manually installed by players.
So in 2002, Valve started work on Steam as a lightweight client to deliver updates over the internet. But over time, Valve realized that Steam could do much more – it could become a full content delivery and digital rights management (DRM) platform for distributing games. Valve opened up Steam to select third party publishers in 2005, and by 2007 Steam was mandatory for activating and installing all Valve games.
Fast forward to today, and the rest is history! From those humble beginnings focused on Valve game patches, Steam has ballooned into the undisputed champion of digital distribution in the PC gaming industry with over 30,000 games available and peak concurent users exceeding 30 million in 2022.
And interestingly, Steam remains privately owned by Valve throughout. Now that‘s what I call role reversal! The tool became larger than its creator.
Steam Ownership Breakdown
Even after almost 20 years since launch, Steam continues to be owned, operated, and managed fully by Valve Corporation:
- Company Headquarters: Bellevue, Washington, USA
- Key Executives:
- Founder & CEO – Gabe Newell
- Other co-founders – Mike Harrington, former Valve employee
- Company Valuation: Private, estimated between $10 to $15 billion
- Ownership Structure: Privately held, Gabe Newell has majority control
Unlike publicly traded gaming companies like Activision Blizzard or Electronic Arts, Valve has strategically kept away from external shareholders or investors. According to Valve‘s employee handbook leaked in 2012, this is to focus on game development and encourage employee creativity over short term business pressures.
And the results speak clearly – in my view Valve‘s games have pioneered groundbreaking innovations time and again, from Half-Life to Left 4 Dead, Portal, DOTA and more because of this corporate structure and leadership.
Breakdown of Valve Revenues
This table shows Valve‘s total estimated annual revenue over the past 5 years, mostly generated via Steam (Source: CNBC)
| Year | Total Revenue (est) |
|---|---|
| 2018 | $4.3 billion |
| 2019 | $4.7 billion |
| 2020 | $5.9 billion |
| 2021 | $7 billion |
| 2022 | $11 billion |
As you can see above, Steam has been an exponentially growing cash cow for Valve, now likely responsible for over 95% of its total income.
Where does this mammoth revenue come from? As the one and only owner of Steam, Valve earns commissions in a variety of ways:
- Up to 30% cut from all game and DLC purchases
- Varying revenue share from in-game transactions using Steam Wallet
- 5% transaction fee when players sell virtual items on the Steam Marketplace
- Upwards of $100 as application fee for publishers to list games on Steam
With over 120 million monthly active users playing and buying billions of dollars worth of games, it all contributes to a money minting monopoly for Valve via Steam!
No wonder Valve practically exited active game development for nearly a decade – Steam‘s runaway profits guaranteed they did not need to!
What Steam Ownership Means for Valve
It is quite evident that owning Steam provides tremendous financial freedom and security to Valve as a rather unique game studio. Unlike most others, their coffers are overflowing purely by facilitating other developers to sell games rather than making their own!
And it raises an important long term strategy question – why risk developing big games ever again if Steam will continue printing billions as is every year?
Well in recent years Valve seems to have realised relying just on Steam‘s distribution revenues has downsides too. Despite the insane profits, community perception that Valve had basically stopped making games was damaging their image and brand for attracting the next generation of gamers.
Hence after a long gap, in the past 3 years we have seen Valve roll out quite a few new titles made in-house, including hit VR game Half-Life: Alyx. Going forward, I anticipate at least 1-2 new Valve-built games releasing annually while Steam concurrently breaks new records for user numbers and sales.
So in summary – the formidable cash reserves from Steam will continue funding Valve‘s future game development ambitions in a way no other studio can dream of matching! 15 years since it first debuted and disrupted gaming forever, Steam‘s world domination under the hands of creator Valve moves onto its next frontier!
