Valve announced today that it has settled its pending lawsuit with Vivendi Universal Games, including dismissal of all claims and counterclaims in the long-running court battle. As part of the settlement, VU Games will cease distributing retail Valve titles starting August 31, 2005.

Additionally, Cyber Cafes previously licensing Valve games from Vivendi must now license the titles directly from Valve.

Valve has not announced a new publishing partner, or whether the company will now solely rely on Steam for distribution. A new publishing agreement would almost certainly be needed for the Xbox version of Half-Life 2 scheduled for release later this summer.

Today's announcement not only brings to a close a legal battle which began in August 2002 with Valve disputing Vivendi's cyber café licensing -- and leading to a counterclaim from Vivendi that Valve's Steam service violates distribution agreements. More significantly, this marks one of the first times a developer has gained such independence from a publisher. Not only has Valve kept full control of its intellectual property, but it is now free to choose another publishing arrangement, or handle distribution entirely on its own.

That's significant in a time when many independent studios feel bullied by publishers, often losing support for, or control of, their properties. Interestingly, Valve gained its strong position not only with an exceptionally strong product, but by taking advantage of digital distribution. Valve's independence may signal a new trend in the industry, one which deemphasizes the power of publishers, enabling independent studios to succeed (or fail) on their own terms.

We expect to hear more details from Valve soon. Stay tuned.