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EDIT : Ok I tried it with a game.
When you delete the game it is gone and you need to rebuy it if you want to play again.
Also another thing I noticed.
Lets say you bought a developer package game with 25+ games. If you want to delete 1 of them, then you will also have to delete the other 24 games.
For example if you buy Borderlands 1-2 bundle and want to delete Borderlands 1 permanentaly, than Borderlands 2 is being erased as well.
EDIT : This is a terrible feature. Needs to be removed. Simple HIDE or Folder organization is the best method.
sourceFor those with OCD and like a clean Steam Library, or those who are so fed up with a game's presence they want to banish it forever from their account, Steam has quietly introduced the option for users to delete games they own.
Discovered recently by a NeoGAF user, the option is available in the help menu of the Steam client. Clicking on a game you own brings up a page where "I want to permanently remove this game from my account" now is an option.
Steam will then ask you to carefully review your decision and then click "I want to permanently remove this game from my account" to do so. Checking that option doesn't just pull it out of your Steam Library - it deletes your ownership of it, so think about that carefully.
EDIT : Ok I tried it with a game.
When you delete the game it is gone and you need to rebuy it if you want to play again.
Also another thing I noticed.
Lets say you bought a developer package game with 25+ games. If you want to delete 1 of them, then you will also have to delete the other 24 games.
For example if you buy Borderlands 1-2 bundle and want to delete Borderlands 1 permanentaly, than Borderlands 2 is being erased as well.
EDIT : This is a terrible feature. Needs to be removed. Simple HIDE or Folder organization is the best method.