Valve has announced a beta for "Steam Broadcasting," a mode that lets you watch your online friends play their Steam games live.
When you see a friend playing a game, clicking on their profile will now show a "Watch Game" option. Broadcasters have access to privacy settings and can choose who watches their streams, whether their desktops are visible, and more.
Steam Broadcasting mode is available now. If you want to try it out, you'll need to opt in by following these steps:
Go to the Steam client main menu
Under the "Settings" tab, click on account
Change your "Beta Participation" setting to "Steam Beta Update"
To broadcast, you must have access to a "non-limited" Steam account, which simply means you've made a purchase over Steam. Your account must also not currently be Community Banned.
According to Valve's FAQ, broadcasts are currently "live only," and cannot be saved to view later.