Update: Valve has issued a statement indicating that it is aware of the block and working to address it.
"Right now players in Malaysia can access the games they own on Steam, but the Steam Store is being blocked by some local telcos in Malaysia. From reports we are reading, this is due to a single game that conflicts with local laws," a rep said. "We have contacted the developer, removed the game, and are attempting to make contact with the officials in Malaysia to remove the block. We apologize for any inconvenience."
The removal of Fight of Gods appears to only be in effect in Malaysia, however, as it's currently still available for purchase in the US and elsewhere.
The 2D fighting game Fight of Gods pits deities from various pantheons, including Buddha, Odin, Zeus, and Anubis, against one another in one-on-one brawls for the right to lead the world to enlightenment (or something like that, anyway). It's not the first such game to take that angle—Faith Fighter, which enables you to "choose your belief and kick the shit out of your enemies," caused a stir nearly a decade ago—but it may be the first to so obviously capitalize on the easy and inevitable controversy caused by such an up-front inclusion of Christianity. And it worked, although perhaps not in quite the way the developers intended.
The game itself, currently in Early Access, doesn't look all that terribly impressive—a judgment I make without having actually played it, mind, and I do think the launch trailer is pretty funny. But it caught the notice of religious leaders in Malaysia, one of whom, Mohd Asri Zainul Abidin, told The Sun that the Malaysian government "should immediately ban the game or block the download link to avoid the potential of religious tension in the country."
“Any religion and religious leaders who are rational would downright condemn the game, as I’m sure no religion encourages violence and fighting against each other,” he said.
Others echoed that sentiment, sharing dire warnings of the game's damaging effects, and the outcry was enough that the Malaysian Communications and Multimedia Commission gave the "platform provider"—that being Steam—24 hours to disable Fight of Gods downloads in the country. "Failing which, further action will be taken," the Minister said in a statement sent to The Star. "It is in the public interest to ensure that immediate steps are taken so that such contents do not continue to harm others."
That apparently didn't happen, or at least happen quickly enough, however, as the government has now blocked Steam in its entirety in order to prevent its citizens from playing Fight of Gods.
"The game is not promoting any religious agenda and is not designed to offend. The description of the game on the digital platforms through which it is distributed provide clear guidance on the nature of the game and its content so that people can freely choose whether or not to play it. We fully respect the choice of those who would not wish to play it," developer Digital Crafter and publisher PQube said in a statement sent to Kotaku UK.
"We are disappointed that such freedom of choice is not given to everyone and in particular that the game has been forcibly removed from sale in Malaysia, although no direct communication has been received by us as to the reasons for this. Nevertheless we respect any rules and censorship imposed in any given territory."
It's presumably within Valve's power to keep people in Malaysia from downloading Fight of Gods, so the hangup is probably due to the fact that government officials haven't actually requested that anything be done: PQube said that prior to the Steam blockage, it "never received any communications from Malaysian officials." I've emailed Valve for more information and will update if and when I receive a reply.