It'll be interesting to see how far we can push this model. I don't believe in the micropayments or subscription models as a panacea, but it's pretty clear that digital distribution allows for greater volume at lower cost. Will great games like L4D make enough money at $10? $5? $1? Will app store games make enough at $0.10? $0.01?
It'll be interesting to see what it does to quality as well. Steam seems to be doing well with quality, even when distribution costs are nearly nothing, but the Apple's app store has seen a huge number of cheap, addictive games because they make more money for less development time. Hopefully it all balances out, but more and more, software will lose the ability to price itself as a physical good that comes in a box. Where does it settle?
In any case, I'm excited.
Steam excels because it does a far better job than than the App Store of making sure that quality is always on the front page, while also making sure that the front page changes often. I think they have found a good meeting point between content/metrics-driven decisions and an editorial voice for picking what gets featured. The App Store, not so much.
10% cut : 22% increase
25% cut : 159% increase
50% cut : 110% increase
75% cut : 293% increase
(At least, that's the logic I'd use. I've bought several games on Steam -- including this one -- all on 10%-75% sales.)
I buy all my games when they go below $30, so it makes no difference to me if the game goes on sale or simply drops in price because I'll grab it anyway. Most times I'll grab the game used as I get a disc in excellent quality, usually $10 cheaper than the original game. I'm already watching the used Fable 2 and Fallout 3 games for when they hit $30 because I'm snatching them up.
Edit: I'm an exceptional bastard when it comes to used games, because I always look through them because there's often a wrongly priced copy that they have to honor the pricing on. I got Bully: SE $10 cheaper and just a few days ago Mass Effect $8 cheaper because of the mistake. I was actually waiting before getting Mass Effect as I wanted to complete Bully, but when I saw a huge stack saying $33 and then in the bottom row one saying $25 I couldn't resist, especially considering Mass Effect used prices are going to start going up through this year with ME 2 coming out in the spring of 2010.
I've always thought that $10 is so little that the biggest barrier to paying is just the reluctance of getting out the credit card or the idea of paying at all, but maybe that's wrong.