I'm convinced that's more that games were very overpriced for a long time. Or at least they were expensive because sales were generally lower. Games used to be ridiculously expensive.

Big publishers like EA, Activision, Take Two, etc. All still made/make killer profits on games. Development costs more today, but games are also selling a lot more plus there's other revenue streams like microtransactions and subscriptions. They really aren't struggling for cash.

Nintendo has the right idea. They just basically never drop the price of their games. Whereas most other publisher's reduce prices by 50% within just a month or two. Big games often have long tails.