For me, it depends on how far publishers are willing to go to accommodate the end consumer. If digitally distributed games continue to be released with malware such as SecuROM, and enforced limited installations, etc., then I wouldn't contemplate it (and the same holds true for disk-based media).
I'm a long-term PC gamer, and I want to be able to play any and every game I purchase five or ten years from now - just as I can go back and play the games in my collection that are more than 10 or 15 years old. Some people argue that there are no guarantees games will work anyway under whatever OS is released in the future - but my response is that people find a way, as evidenced by DOSBox and other emulators, and community-created 'patches' that enable some old games to work under the current Operating Systems, and I think the same would hold true in the future.
I don't want to be completely reliant on an online service, such as Steam, at the moment because there is no guarantee it will still be around in the future, or if it is, there's no guarantee it will continue to support older games. Also, if there is an interruption (as there was a few months ago), it means you could be subject to 'down time'. It might be a minor inconvenience, but its still an inconvenience if your free time is limited. If the distribution service goes out of business, of course, there are no guarantees of patches being released to enable you to play your game collection offline (or being able to install it on another PC in future without the need for online activation).
Another factor is cost - digitally distributed games are sometimes even more expensive than boxed versions, yet come without disks or manuals and do not have the same costs of distribution. If DD games were cheaper, and came with less restrictions so you could install them any time you like and just play (without having to authenticate online), then it would be far more attractive in the long term.
Steam has some way to go before it would become my primary access point for gaming, and dropping things like SecuROM on games released via Steam would be a major first step. For example, if Steam released SecuROM free versions of FEAR, STALKER, Warhammer 40k series, NWN2, and a lot of others I've bought previously on disk, I would definitely purchase them AGAIN just so that I don't have the hassle of that malware. I would also buy Mass Effect PC, Far Cry 2, and all the other games I've missed out on recently. Unfortunately, the Steam versions of such games still come with SecuROM as part of the package, so I won't touch them.
I have no special ties to physical media when it comes to games, other than the issues I've already highlighted. I do currently have broadband, so on a personal level there is nothing stopping me from going completely digital. If publishers were willing to drop DRM for digitally distributed titles, and there were no artificial restrictions on the longevity of games, I could easily make the switch and be satisfied (regardless of my feelings about other gamers being left out in the cold). Without that, there's a snowball's chance in hell, and I would have to be satisfied with my current game collection.
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