Actually box retailers only took 10-15% and fees for game discs, boxes and shipping are basically 0 due to the volume. You’re talking maybe $12 total costs which is than the current cut plus you also don’t have to pay for returns, the retailer dealt with that
That's very far from the facts.
Retailers took a significant %, having to pay for location, brick&mortar, presentation, local maintenance, and staff.
And you forgot a large number of costs and steps. A publisher would have to pay for the disc manufacturing, which often meant a different disc by localization area. They have to be tested. These discs have to be covered/printed over, again in a localized way. Then put into boxes, which absolutely need localization. All that process need insurance. Then, you have to store all of that. Before selling and shipping it to a distributor, who also has to pay for inventory, insurances, shipping, and various costs which aren't small when dealing with international borders. And the distributor have to sell and ship to a wholesaler, again with its own costs, cargo, insurance. Potentially a few more intermediaries, before the last one has to sell and ship to individual retailers (or their central or regional buying department, for bigger chains), again with costs in cargo, shipping, insurance. Every single one of these steps had to be managed by people, whom someone had to pay.
Manufacturing and shipping (plus similar costs) absolutely do NOT cost zero. In fact, once you moved into serious numbers, that cost is pretty much linear with volume. Making and shipping 10000 pallets cost literally ten times making and shipping a 1000 ones.
Yes, in some limited best cases, when a US giant is making a big US game in the US for the US while having a very large catalog they can use to bludgeon retailers into impossibly low margins, one SKU can get reasonably low. But the average for publishers, over the world, is far from a single best case.
The 30% (in reality for big publishers and big games more like 20, or even less than that) cut of Steam or other platforms with a single capital expenditure at worse of $100 would have been a wet dream compared to their current business at the time. In fact based upon several conversations I had (when I worked in the industry, or a few years after I left) it was a wet dream for them.
And let's not forget the cost cratering down weren't just the manufacturing and selling ones. Advertisement and PR costs were also taking a huge dive down, very fast.
And of course all of that ignore the fact that the market size exploded up, meaning way more unit sold. And that productivity also exploded up while costs (for things like engine and middle ware) went
way down. Budgets are high because it's a business choice by big publishers, they all want to be the next GTA, Roblox, or Fortnite. Not because it's a necessity, as Devolver, or even Nintendo, clearly demonstrated.
Around the time we're talking about, I bought the week of their release and without any special sale or anything, a Street Fighter game for 23€ (boxed, with free shipping). And a couple of years before that, same conditions, a KOTOR game for 40€. And those prices included VAT, around 18% of it.
That was the price of big buster PC games at release, and 40 was already an increase over the previous common 30.
. That cost for physical boxes was (when all is taking into account, but the inventory risk and destruction cost) way, WAY higher than that. It was closer than the opposite, the publisher was getting a net of 30% or less of the shelf price.
