Here is the thing I don’t think retail has much impact on digital sales. Most people are aware that often you can find cheaper digital versions now a days. Not only that but retailers can’t provide the services that steam can. With or without the case there is no competition. For example, if there was a retail verison with case that I couldn’t connect to steam and a steam version without case that cost the same I KNOW I’d get the steam version.
Steam provides community features, networking, management and other things like the in game overlay that retailers simply can’t provide. The only thing that could stop steam now is another digital distribution system. Who stands a chance, not anyone right now. Hopefully MS will get their shit together on Windows Live or Xfire will explode into a huge thing or Direct to Drive will provide better services or something.