When watching others play games, Twitch is the way to go, but Valve's getting into the game in its own unique way.
Valve is beta testing Steam Broadcasting, which works like this. On your friend's list, there will be a button that says Watch Game. Click on it and then you can authorize your friend to watch yourself playing a Steam game. It's that simple.
You have control over who can watch you play. Set it for just friends that can request, friends you invite, or anyone. Valve lets you control the access level of your viewers.
If you want to try it out, just opt into the Steam beta client. Sounds pretty interesting and I wonder if it can work with all Steam games. Also, I wonder if it can work with non-Steam games, like their In-Home Streaming feature. Guess I'll have to test this out tonight.