While conducting an interview with Games for Windows Live general manager Chris Early--in which he confirmed that Microsoft will be adding full games to its PC digital distribution network in the future--I was able to check out the just-launched redesign of the GFW Live interface, as well as the upcoming GFW Live Marketplace application.

I came away from the meeting a little stunned, and found myself preparing to finally witness some healthy competition for our digital PC dollars.

The new in-game Games for Windows Live interface (pictured above) is a significant leap forward for Microsoft. It does everything you'd expect--displays your Gamerscore, provides a friends list, and allows for private messages and chat--but is now far more effective. It's a minimalist, PC-centric approach compared to the bloated, console-derived first iteration of the software.

But while the new interface is the kind of necessary, late-to-the-party update we've come to expect from the Games for Windows program, the upcoming Marketplace is far more interesting, serving as the strong opening salvo of an invasion into Valve's largely unchallenged digital distribution territory.

The Marketplace is essentially a Steam-like application, which will eventually be included with every GFW Live title. It can either be launched from inside a game, or simply kept running in the background. I didn't get a look at memory usage, but Microsoft described it as "lightweight," and it did seem so.

From a design standpoint, I daresay Microsoft's Marketplace may trump Steam's user interface, at least judging from a quick glance. We don't have any screenshots of it yet, but I can describe it as similar in style to the in-game interface pictured above. In terms of format, think of a more colorful version of Steam's main page, but a bit less confused.

The front-page features large rotating advertisements for new releases a la Steam, with smaller game thumbnails below. A sidebar offers simple tabs for browsing trailers, demos, and downloadable content by various categories. It appeared to be a derivative, but attractive application--a bit more inviting than the functional, yet rather jumbled Steam.

There are a few notable functions hidden in the simplicity. One tab provides a simple list of the games that you own, which also indicates if any new content has been released for those games. This page also allows you to play downloaded demos and videos, as well as easily start, stop or resume the downloading of said content.

In terms of services, the Marketplace already stands to take a bite of a rather untouched pie. Full PC game sales may still be down the road, but the Marketplace's support of DLC is an important one. Downloadable content can be a very attractive source of income for publishers, and with Microsoft handling the sales and distribution--the company will serve up every patch and add-on pack from its own servers--it has already attracted some big companies to its camp.

Of course, gamers will always have a choice of how to manage their games. For example, a Games for Windows Live-exclusive title can be purchased and launched from Steam, and even a full game purchased on the GFW Marketplace in the future could theoretically be launched via Valve's application.

However, add-on content for GFW Live-exclusives like Fallout 3 will only be available through the GFW Marketplace. Additionally, a Games for Windows Live exclusive also indicates that any multiplayer component in the game will only use GFW Live's multiplayer solution--another attractive service Microsoft is providing to developers--as in the case of games like Grand Theft Auto IV and Dawn of War II.

So what does all this mean for the average gamer? Basically, you may find yourself increasingly forced to use Games for Windows Live--though this will now be far less painful. And the truly average gamers, who buy their games at Best Buy based on the box art, could begin to adopt the GFW Marketplace as their default PC platform through sheer proliferation.

It's not hard to see why Valve is providing free services to developers with its Steamworks software suite. Now that Microsoft is getting serious, it's only a matter of time before the two companies will be directly competing across several fronts--in a war that we will all hopefully profit from.

Check back tomorrow for our full interview with Games for Windows general manager Chris Early.