What are you talking about? Nearly every game that I've seen in the massive library has cheaper prices than general retailers. On top of that, they are ALWAYS offering discounts and bundle deals, which in effect, work out cheaper than buying all of the games from retailers. Far cheaper in fact.Angurvadal_88

This is true for older games. I sepcifically referred to new games in my original post (the examples I provided were Half Life 2, M&M:DM, and Bioshock - all priced exactly the same as retail on release date.) I really like Steam's back catalog of older games and have purchased a few of those - making those games available easily and for cheap is a great service. Cutting out the retailer and not offering any of that savings to me is not a great service, particularly since I can't re-sell the game. I really like the idea of digital download and I think Steam's model works except for this issue. I will say that Steam tends to offer discounts for new games before the retail outlets do (a few months after release.) If Steam offered Bioshock for $39.99 instead of $49.99, I would already own it. As it is, I'll buy someone else's copy off eBay or wait until the game is discounted.

It would seem that digital distribution offers significant advantages for the distributor over a traditional brick-and-motor distribution scheme and that costs for servers, bandwidth, and support staff are far far lower than manufacturing, warehousing, shipping, and retailing costs. Not only this, but by eliminating transferability, digital distribution effectively squelches the second-hand game market. The consumer also doesn't get a tangible, easily transportable product to put on the bookshelf. The only benefit to me, as a consumer, is a modicum of convenience - I don't have to spend 10 minutes in the car on the way to a brick-and-motor store. Why then, is the price on Steam for new games (e.g. Bioshock, Half-Life 2, Might & Magic: Dark Messiah) the same as the price from any brick-and-mortar store?