This Valve Q&A on GamesIndustry.biz talks with Valve's Doug Lombardi about a variety of topics, learning along the way that Valve was actually looking to industry leaders for a digital distribution scheme to suit their needs before deciding they needed create Steam for themselves after realizing folks like Yahoo and Microsoft were not up to it at the time:

You know, we went around to Yahoo, Microsoft...Who else was around at that time? Probably Real Networks and anybody who seemed like a likely candidate to build something like Steam.

We basically had our feature list that we wanted. We wanted auto-updating, we wanted better anti-piracy, better anti-cheat, and selling the games over the wire was something we came up with later. But we had like real world problems because Counter-Strike was getting huge and we would release these updates that would knock the 70 - 80 thousand simultaneous players right down to zero and it would take 48 - 72 hours for it to come back up and that was like this huge anxiety roller coaster that we would take every two or three months.

It also limited our ability to put those updates up because of that. It was like..."Well, if we're going to turn the lights off for 48 hours in the player community, the update needs to be worthy of that." So, you had to bundle up the things you were going to put up in the update or you're going to pull it out because you didn't want to take the roller coaster ride. So that was really the impetus to why we did [Steam].

We went around to everybody and said "Are you guys doing anything like this? We need this for our games, and therefore other people are going to need it someday soon." And everyone was like: "Blah, blah, blah...That's a million miles in the future." So we said "We need it now" and everyone said "Well, we can't help you."

So we just went off and started doing it. Once we pick something we just start going after it and we're not really too concerned with what other people are doing because that's just an easy way to get distracted.