It is the first time Valve has shown the controller in action following its announcement late last month.
Additional demonstrational videos, featuring footage from third-party developers, will be released in the future, Valve said.
The controller featured in the video is the same version that will ship this year to 300 Steam users as part of the Steam Machines beta.
The Steam Controller will work with all past, present, and future games on Steam, including those that were not built with controller support. Valve can achieve this by “fooling” the older games into thinking they are being played with mouse and keyboard.
The input is the first mainstream controller to feature haptic feedback. It also features dual circular trackpads that replace traditional thumbsticks. These trackpads are clickable, turning the entire surface into a button. The Steam Controller will be available alongside Steam Machines in 2014.