I can't help but think that Valve has gone so long without any meaningful competition that they don't know what to do with themselves now that they have it.
Agreed. Last time it looked like there might be a worthy competitor (when there were some ominous Microsoft clouds on the horizon) Valve did a lot of good with their Steam Machine push. Linux support, big picture mode, controller support, etc. Now with the Epic Store clouds on the horizon, we're getting a more favourable income split for publishers and a library overhaul. They need these occasional threats to shape up and improve.
Don't forget the exclusivity deals Epic has been throwing around. It's pissed off some consumers, but from what I've seen there hasn't been a meaningful hit to sales.