Steam was offering 75% off deals before Impluse was even around. They were taking advantage of differing price elasticities of different consumers. It had nothing to do with direct competition from Impulse per se.
Sorry but that's not true. I've seen people on forums claim that Steam was doing weekend deals before Impulse (they don't provide evidence, they just insist that's the case despite archive.org making it pretty obvious that weekend deals didn't show up until AFTER Impulse came out).
Steam didn't start doing 75% off deals until AFTER Impulse did the 75% discount on Space Rangers 2 on Impulse.
It's the same on the big huge Christmas sales. No one has ever claimed that there weren't sales of some kind now and then. But it was Impulse's aggressive weekly sales and such that changed the game.
Personally, I don't have an issue with the "DRM" aspect of Steam. Steam works fine. I have it on my machine. I use it every day.
The issue is the lock-in to the Steam client. Steamworks could have been architected not to force the bundling of their store client. But it does.
I like Steam. And as a developer, I appreciate what Steamworks provides. However, I do not want to be lending my support to something that is clearly designed to turn the PC into a closed platform.
If I make a game for the iPhone, I understand that I have to sell it on the App store (as a practical matter). But as a PC developer and consumer, I don't want to see the PC become a closed platform.
If you take Steamworks to its logical conclusion, then in 5 years, the PC platform will be closed. If you want to make a PC game that will see a reasonable audience, you will have to sell it on Steam and accept whatever requirements Steam insists on. We already have people trying to pressure us to sell our titles on Steam (even though Steam takes about a third of the revenue on any title sold on it).
Let's be realistic here, in 5 years, if Steamworks and Steam were to completely dominate the market, there'd be no real reason to have games at retail. Putting games at retail is expensive. Think that's a great thing for consumers? Think again.
If the PC were to become a closed platform, then as a developer, I might as well pick a closed platform where the the platform owner provides a lot more services to the developer (i.e. consoles, iPhone/iPad, etc.). Why make a game for the PC, with all its headaches, if I'm going to ultimately be forced to sell it in one place?
Consumers are rarely aware of what they are missing in the absence of competition.
2KGames is certainly free to use whatever SDK they choose to and accept whatever strings come along to it. As a consumer and modder, I can choose not to support that. That's the beauty of the free market.