In case anyone missed McCarthy's description of what you're paying for at the retail level, a good $6-12 of what you're buying isn't the game. You're buying retailer profit and absobing cost of goods and distribution fees.
I find it hilarious that people think this is a good value.
Furthermore, retailers set stifling standards about what they will and will not carry. For example, Wal-Mart will not carry M-rated titles because they are a family-oriented company. Whoops, I mean unless it sells really well. In turn, this prevents publishers from wanting to support M-rated titles. When publishers don't want to support M-rated titles, they won't pay developers to make M-rated titles. Or Western titles. Or whatever titles retailers are nervous about because of market studies and what the a gypsy in the form of a dolphin told them in a dream two nights ago after a bad acid trip.
Online distribution methods like Steam should allow companies to circumvent a lot of these problems, and ultimately that's what Mike was getting at.