Though Vivendi Universal Games published developer Valve's Half-Life 2 in late 2004, the two companies have had longstanding lawsuits and countersuits against one another, stemming from disputes with the Sierra division back in 2002. The legal action between the publisher and developer is now over, following a settlement that dismisses all claims.
More striking than the settlement itself, however, is one of its terms: Vivendi Universal Games will cease manufacturing and distributing physical retail versions of Valve games, including Half-Life, Half-Life 2, Counter-Strike, Counter-Strike: Condition Zero, and Counter-Strike: Source.
This arrangement will be in effect as of August 31, while another condition of the settlement, that Vivendi surrender its existing cyber café licenses, will go into effect immediately. Operators of cyber cafés who host Valve games have already been informed that Valve holds sole rights to grant licenses, and that existing licenses formed with Vivendi are void.
Though it's possible that Valve may simply be seeking an alternate distributor for their games, it's more likely that the company intends to do away with physical distribution altogether. The release of Half-Life 2 generated some controversy when those who bought a standard copy in stores received no paper manual, and were required to register with Valve's Steam service to play even legitimately purchased software.
The intention behind those moves was to drive more digital purchases through Steam, and it may be that Valve intends to go further with Steam by using it as their sole delivery point for games in the future. The language used in the settlement's announcement, that "VU Games will cease distribution of retail packaged versions of Valve's games", likely hints that Valve's continuing support of electronic distribution will be strong.