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Probably, Frontier servers are busy right now, and Steam login timeouts before it is accepted.
They need to add complete single player mode, if their servers are dying.
Networking problems do happen, even to biggest backbones. It doesn't mean that those servers are dying.
As I mentioned in my most recent post, another online game I play which requires steam authentication was also having issues.
Not quite. Remember the original Elite (on BBC IIRC) with the lenslok? If you lost the thingy then you couldn't decode the text.
I remember those daft decoder things, and the ones that used the game manuals... "Enter the 2nd letter of 4th word of the 2nd paragraph on page 17".
Not Frontier... It's Steams authentication servers that are the problem. It's been quite a frequent problem recently, and not just in this game. It's also not happening on the Epic version.
The launcher will prompt for a key as a last resort when it's unable to detect any game access, which would suggest that it's either unable to see the link to Steam you have in place or to correctly utilise this to authenticate you.
If there's any kind of outage in communication between Steam and ourselves, the launcher can lose the ability to query Steam for your product access, at which time you'll run into the issue described. This can also happen on first launch after linking your accounts.
If you don't see a 'Log in with Steam' button on the launcher when it loads, you may sometimes just need to fully restart your Steam client to correct this.
If this issue is persisting for anyone, feel free to get in touch via support ticket:
https://customersupport.frontier.co.uk/hc/en-us