Right now, we have hundreds of retailers that sell games. If things were to go totally digital, we would be down to 4 or 5 major distributors of games (Xbox Live, Playstation network, Steam, Origin, and Amazon?) and that would be about it so far as the "major distributors" go. We would go from having 100's of retailers selling games to less than a dozen.
In other words, if the distribution channels were to go totally digital, there would be MUCH less price competition, which is bad for consumers. Right now, I can compare prices on Xbox Live, Steam, Walmart, Best Buy, Gamestop, Target, Toys R Us, etc. As a consumer I win out because I have a lot of options to find sales and discounts. However, when the channels of distribution go from several hundred retailers to about ten, your choices and options for looking for discounts are suddenly limited. This is another reason that I fear digital distribution. Digital distribution would mean much, much less price competition. With less price competition or the need to clear out physical inventory on store shelves, I can see prices staying high and very rarely going on sale.