Gamestop garnered a great deal of negative attention recently over the revelation that employees were instructed to remove coupons for a free online copy of the game Deus Ex: Human Revolution (DXHR) on Onlive--a video game streaming service.  

The dust has settled now after Gamestop recalled all copies of the PC version of Deus Ex and offered customers gift certificates and discounts. But, the incident raised the ongoing issue of competition and tension between brick-and-mortar retailers and digital distribution platforms for games.

The controversy began last week after customers who bought the PC version of the game from Gamestop discovered the Onlive coupons, advertised by publisher Square-Enix, were missing.  Gamespy--the gaming publication--later received a leaked email from a Gamestop employee instructing stores to remove the coupon.

After the story spread across the web and prompted anger from gamers, another leaked email revealed Gamestop was recalling all copies of the PC version of DXHR.  The email also mentioned that since Gamestop is developing its own streaming service--Spawn Labs Cloud Gaming Division--the Onlive coupons were considered a competitive service.

Square-Enix defended Gamestop's actions, saying Gamestop was not informed of the coupons in the game boxes and were within their rights to remove them.  Gamestop issued an apology to customers last Friday, offering a $50 gift certificate and a "buy two get one free" discount on used games to gamers who bought the PC version of the game.

With digital distribution platforms like Onlive and Steam growing larger, Gamestop has not been the only retailer to take actions to protect itself from these competitive services.  Earlier this year, game publishers like 1C Company (Il-2 Sturmovik series) reported that retailers in the U.K. were threatening to blacklist PC games that required installation of Steamworks, Valve's digital distribution service.

Since then, gamers in the U.K. have reported that a number of major releases, such as Brink, were not available on Steam for up to a month after their physical release dates.  Users on web forums accused Game, a retailer in the U.K., of making threats to pull Steam-enabled games from their shelves causing the release delays.

Developers have continued to complain that game retailers including Game have been stocking PC games in smaller numbers. Game, in its defense, denied the allegations citing the low numbers as a result of lack of demand.  

PC developers like 1C Company on the other hand say the digital market is much more inviting, and profitable.  It remains to be seen how retailers like Gamestop and Game will maintain a relationship with PC publishers in such a competitive climate.

Reach writer Shea Huffman here.