Protip: We're not the target demographic anymore. Someone posted about why MTV doesn't show music videos anymore. That's related to the argument you're raising Menegrothx. Things are moving to a digital format, and I can't help but feel compelled that it's a step in the right direction. That's mainstream gaming for you now. The industry is changing. To dismiss that is a point illustrates you're not in tune with how "mainstream" gaming industry is evolving.
You mentioned World of Warcraft before, so I'll keep that as a theme. For example, here's the trend of selling digital versus retail for Mists of Pandaria:
http://www.forbes.com/sites/carolpinche ... nearly-41/For one: Digital media allows us to easily access titles of the past, showcasing older titles and supporting a brand. I like that I can experience Nights into Dreams on the Xbox, because I never owned a Saturn. Additionally, If you look at the broad userbase of the iTunes store or any digital store, digital media is a reality that can't be ignored.
Two: Hopefully digital media allows us to be more mindful of sustainability. All of that plastic, paper, etc can be saved in the process. However, I think the mental hurdle we need to get over is having something physical to hold in our hands to feeling satisfied. I still prefer a book to a kindle, and a CD to an MP3 but it's no surprise the latter is slowly fading from prominence. So, when we want to show off our collections, looks like our friends will have to browse our digital libraries.
Last. I bought the Orange Box for Portal alone, and have no connection to Half-Life. Blasphemous--but I'm really just calling attention to the generalization you made about those that bought The Orange Box. There's always exceptions, I know but i bet the demographic that bought The Orange Box for something other than Half-Life 2 is bigger than you think.
You raise good overall questions about the state of the industry, but the fact of the matter is there is still quite great diversity of what's being produced and offered--it's simply through channels that you aren't willing to acknowledge are a huge factor.