Here's what is wrong with it -- and the comparisons to Steam are always off the mark.
On previous consoles, you can play any game you own. You bought it. It is yours. You physically have it somewhere. You can still play your PS2 games on a PS2. You can still play your NES games on an almost 30 year old NES. With digital games on console, you'll be able to play them until they decide to turn the download server off. Or turn the DRM system off. Or turn off XBox Live and move on to the next thing. It also means that there is no more going out and buying a Sega Jaguar from 20 years ago and a bunch of used games somewhere to play it on, because you enjoy it or because you weren't into games at the time the Jaguar came out, but you'd like to experience them.
Then, there's also the issue of generations... A game you buy in September of this year on the 360 won't be playable when you upgrade to the XBOX ONE two months later. On Steam (well, PC in general - let's stop acting like Steam is the entirety of PC gaming) - I can still play games I bought ten years ago on my newest rig, even though it is the tenth machine I've built in ten years. I can still play PC games on my PC that are thirty years old.
And, finally, Microsoft has shown no interest in discounting games. Their "on demand" selection is both pathetic in variety and price, usually charging more for the digital version of a game that is several years old than the actual physical copy would cost to order online and have shipped to your house. On PC - you have a massive collection of indie stuff directly from developers and publishers, a ton on Desura, many sold through Humble Bundles. You have tons of older stuff preserved through GOG, and you have unbelievably steep discounts on newer games, on Steam. Often, during the same year they were released. And all that without paying $60/yr.
Gamestop's business model is irrelevant. Further, what do you or I care? I am not in the business of worrying about the financials of the game industry. I am in the business of watching my own finances and if I can save money, that is important to me. Gamestop is pretty crappy and so is their exploitive business model. Using that as some justification to diminish consumers' rights to own their purchased content and have portability and resale and so on is a bit like using the shit the Westboro Baptist Church says as an excuse for eradicating free speech.