Games continue to cost more to develop. But, the purchase price of games hasn't gone up in 20 years. All the game publishers seem to have a mortal dread of raising the price of games to compensate. I think they see providing extra, in game purchases is a way for them to make up the difference.
This isn't really true these days though (at least on PC).
Game companies do not have to pay for their games to be placed on disks now. They develop the product once and they have infinite copies for sale without the need for physical mediums. They can also release patches automatically, instead of having to pay for a new version of their games to be burned on disks and sold that way.
They also reach millions of consumers now using their digital platforms, instead of having to have physical copies made for different languages and then only having a limited amount of copies for sale. They also don't need physical stock in some warehouse, that is dead money until (if) they can sell it all. Also no need to rent or own warehouses for the physical games. No need to make contracts with different countries distribution and no money costs of hiring delivery companies to transport thousands of physical copies around the globe in ships, trucks, trains, planes, etc.
There is also the thing about not having to pay to print manuals and game covers.
And let's not forget that many (if not most) game companies, besides indies, get their game paid by their publisher or "owner company". The publisher finances the game in part of fully. And then covers those costs with sales money. There is also merchandise, most large IPs have tons of merchandise that rivals Disney IPs these days.
And another point is that also most games these days have several versions, and only the "basic" version costs the $60. Some versions can cost $100+. There is also the Season Passes.
DLCs also increase the revenue for game companies. A great DLC meme is Paradox games, like Crusader Kings 2. If you buy Crusader Kings 2 with all the DLCs, you have to pay hundreds of dollars. They now made that game "free to play" on Steam, but they are still selling the DLCs because they get tons of money from those:
Also, new games are pretty impossible to sell after you bought them. So there is no second hand market anymore, which means that if someone wants a "newer" game, their only option is to buy a new copy, which also increases the sales.
This is why game companies still sell their games and make record profits almost every year:
The latest
Newzoo report looks at the strongest players of the games market in 2018. Last year, the top 25 companies by game revenue earned a record-breaking $107.3 billion, which signifies 16% growth over 2017. The top 25’s earnings make up nearly 80% of the global $134.9 billion games market value.
As we can see in that graph, the companies more known for lootboxes and pay ingame items (EA and Activision) earn less than Sony, Microsoft, etc. Which are not known for using lootboxes. So if those companies still manage to make record profits without lootboxes and ingame sales, this pretty much shows that selling games for $60 is still profitable by a lot.
.
