Personally, I do not necessarilly think that Steam is bad. Digital distribution has it's conveniences and has opened the way for indie developers to be able to easily provide their work. Plus, I understand that PC retail is in worse state in the US than it is in Europe, so it isn't really suprising that most PC gamers in the US turn to Steam.
However, I also do not think that Steam is the second coming of Christ that many other people make it out to be. In this digital distribution craze, people seem to be forgetting that it has it's weaknesses as well. By purchasing a digital copy, you preety much rescind any sort of right of being able to resell it or make backup copies of the game.
Worse still, digital property exists in a sort of "legal limbo" in that digital copies are considered a part of a service instead of being regarded as individual products. As a result, should your access to that service be terminated in some form or another (for example, your account gets banned or the company running the service files for bankruptcy), you preety much lose all the games you legally payed for and owned. Retail copies don't have that problem...since they are legally considered to be a product, once the exchange is over, that specific copy is undisputably yours and yours alone.
Lastly, while Steam does sometimes have great deals (especially in times of sales), I think people tend to overrate how much of a bargain Steam is. For example, here are some of the games that I fairly recently bought from a local online retailer (note that none of these were used copies; all of them were legit and brand new). The prices and US dollar value are provided as they stand today (August 24th, 2010):
Dragon Age: Origins [https://igabiba.joker.si/izdelek.php?menu=1&sub=1&izdelekId=2717] - 18 Euros ($22.82)
World in Conflict Complete Edition [https://igabiba.joker.si/izdelek.php?menu=1&sub=1&izdelekId=3749] (meaning it includes both the original game and the Soviet Assault expansion) - 14.50 Euros ($18.39)
Deus Ex [https://igabiba.joker.si/izdelek.php?menu=1&sub=1&izdelekId=1924] - 3.50 Euros ($4.44)
Prince of Persia: The Two Thrones Special Edition [https://igabiba.joker.si/izdelek.php?menu=1&sub=2&izdelekId=3731] (meaning it also includes Sands of Time and Warrior Within) - 14 Euros ($17.75]
Total: 50 Euros ($63.4)
In comparison, here are the current European prices for roughly the same amount of content (note that this does not include any potential limited time sales):
Dragon Age: Origins [http://store.steampowered.com/app/17450/] - 49.99 Euros ($63.39)
World in Conflict [http://store.steampowered.com/app/21760/] - 29.99 Euros ($38.03)
World in Conflict: Soviet Assault [http://store.steampowered.com/app/21910/] - 14.99 Euros ($19)
Deus Ex: Game of the Year Edition [http://store.steampowered.com/app/6910/] - 9.99 Euros ($12.67)
Prince of Persia: Sands of Time [http://store.steampowered.com/app/13600/] - 9.99 Euros ($12.67)
Prince of Persia: Warrior Within [http://store.steampowered.com/app/13500/] - 9.99 Euros ($12.67)
Prince of Persia: The Two Thrones [http://store.steampowered.com/app/13530/] - 9.99 Euros ($12.67)
Total: 134,93 Euros ($171.09)
Also, the retailer I bought these games from provides free shipping for purchases over ?30. So, by choosing to purchase these games from a local online retailer instead of Steam, I have effectively saved myself 84.93 Euros ($107.69). Plus, since I bought retail copies, I don't need to use Steam in order to play them and I retain all the rights that I have as the owner of these specific copies of games.
Now, as I said, the retail situation in the US is much different than in Europe and game prices in general tend to be more favourable across the Atlantic. But considering the comparison above, do you still think Steam is a great bargain for everyone?
Steam is a good service and I think it represents a great alternative means of distribution (and it is certainly by far the most realistic and practical one for indie developers). But note the emphasis on alternative....even if it has certain advantages, I think it would be terrible for gamers if it became the primary or even the only possible way of distribution. So for all the qualities of Steam, I still perfer retail copies...even of Valve games (thank heavens Portal 2 will be available at retail as well).
By the way, am I the only one annoyed at the fact that the Euro sign is not supported?