A pretty dramatic statement for sure, but GAMESbrief (a games business blog with a decent reputation by most accounts) lays out the case against Steam for what "it might do" in the future if it becomes a monopoly in the PC games digital distribution space. The author prefaces his points by noting that Steam is not currently a monopoly and that it has done a good job of helping to keep the PC games market alive.
The points made in the story "Five reasons why Steam will destroy the PC games industry" are a response to feedback received from the book "How to Publish a Game," when it was suggested that "it made sense for a developer making PC games to work hard to get on all the distribution platforms (not just Steam, but GamersGate, Metaboli, Direct2Drive and so on)."
Feedback showed that developers strongly disagreed and showed that many seemed to be putting all their eggs in the Steam basket. The commenters claimed that Steam outsold all of the other sites combined by a factor of 10 or more. Taking that into account, GAMESBrief sees Valve's Steam potentially becoming a dangerous monopoly. Assuming that happens, they list 5 reasons why being a monopoly is a bad thing for game developers and the PC games industry:
Reason 1: Monopolies stifle distribution innovation
In a free market, innovation and improvements are encouraged by competition. The problem occurs when one company is so far-and-away ahead that no-one else can catch up. Think of Google. Think of Facebook. And now we should be thinking of Steam in the same way.
Reason 2: Monopolies stifle creative innovation
I keep hearing that is getting harder and harder to get onto Steam, and if you don’t, then your game won’t sell. The PC has always been an open platform on which it is easy to distribute games. If Steam becomes a de facto monopoly, Valve decides which games we see. A bit too competitive to Half-Life? No distribution. We don’t like Match-3 games? No distribution. We’re not sure that anyone will want a game based on farming? No distribution.
Reason 3: The little guys don’t get a look in
Helping the little guys is hard. When you’re big, and profitable, and important, it’s easy to prioritise the big publishers over the little guys. The little guys are already struggling on the console (although PSN provides one route to market), but the PC has been their lifeblood. A megalithic monopoly could rationally decide that it is no longer cost-effective to support the little guys.
Reason 4: Steam has all the pricing power
Retailers won’t work with indies: it’s not worth their while and, more importantly, indies don’t give them marketing support.
What if that becomes true of Steam? Valve is in a position to say “your game won’t sell without us. We want a bigger cut, or upfront marketing commitment, or some form of guarantee.”
Reason 5: Valve doesn’t need to promote the platform
For all their weaknesses, Microsoft, Sony and Nintendo spend a lot of money promoting and improving their platforms. Steam doesn’t improve the PC as a gaming device. I am a lot more comfortable about oligopolies when there is something in it for the consumer (like subsidised home consoles, for example).
You can read the whole thing, in context at GAMESbrief.com.