Addendum to the beginning of the post, after writing to the end of it: I'm kind of combining a response to both this thread and the older "Push for $70 AAA games" thread, because even as OP stated, the topics are similar.
I'm not sure if OP really knows what a price is. I know that several people who have responded about "value" certainly don't know.
A price has nothing to do with some metaphysical value of the "stuff" that goes into an object. A price is simply what a person or set of persons is willing to pay for an object. One person may be willing to buy a game at $60, another person may be willing to buy the same game only at $30. If you sell the game for $60 to person A and for $30 for person B, you did not "lose" $30; you gained $30 that you would never have had if you forever kept the price of the game at $60.
So, what determines what price point a game initially starts at? After all, if you set your initial price at $40, while there are people who will pay $60, you do effectively lose money. Does that mean you should set a game's price at $1000, since surely there'll be someone who'll pay that, and then start stepping down in increments? No, because price is not the only consideration that goes into trade. There's plenty of stuff involving timing and trends and brainwashing marketing. Ultimate, an initial price is an educated and debated guess over what you can sell your product for which will lead to the market saturation needed for memetic spread, whilst not losing too much money off of the top.
The standard rebuttal is: well, you have to set a price above your costs of production and incorporate the cuts of the middlemen along the way, your retail chains and online vendors and console platforms. Well, that's not got anything to do with what a price is, that's just business. You can set a price lower than the value of materials and labor which went into creating your object, it would just be catastrophically terrible business. And yet, it could very well be that that is all that your object is actually worth. It's an assumption of functional capitalism that manufactured goods have value added to them by labor, and yet it is conceivable that labor can have no effect on the value of manufactured goods, or even a negative one. Don't believe me? Well, it's certainly a very odd thing to happen on a wide scale, but it happens all the time on a (hopefully) small scale: waste. Defects. You get a TV which has a fundamental flaw? In real life, typically that's not known about before purchase, and thus does not enter into a customer's evaluation of the price offered, but there are cases where it does happen. Check out clearance bins in your supermarket: food items that the manager has marked down for a quick sale because the food items in question have sat on shelves for too long and will soon be past sell-by dates. Or, take a case that has happened to me: I have an interest in producing artisanal food goods, and was looking around for a small refrigerator that I could use as a drying chamber for cheese and sausages. I checked on Craigslist, and found an entry for a very fancy and large wine cooler, going for only $80. The standard price for that model was somewhere around $800 or $1000, iirc. Looking into it, I found why: although the cooler was brand new, it had been damaged in transport. While the buyer had a new one shipped to him for no cost, the seller didn't want to pay to have the big item shipped back to them, so the warehouse was allowed to keep it and resell it. The exact damage was thus: the door was composed of 2 panes of glass, spaced about an inch apart. The outer pane was irrevocably shattered, while the inner pane was fine, and the door still formed an environmental seal. Functionally, nothing was wrong with the cooler, once you cleared out the broken glass. Yet its perceived value had dropped to such that it was priced at $80. Frankly, it was a total steal for me. And it must have been drastically lower than the costs of parts and labor which went into it. Yet, that was the price it was determined that would sell it.
All that to say: while business can only run if price covers the cost of labor and resources, it does not have to. And that plays into sales: did it cost more than $5 per unit to create this game that is knocked down to $5 for a sale? Very probably. And yet, there are people who will buy the game for $5 who would not buy it for $60, and therefore that's an extra $5 of profit (minus distribution) that would not be had otherwise.
A datapoint to illustrate the fluidity of game prices: I seem to be the only person who remembers that back in the hoary mists of time of 8 years ago, AAA games, when sold via Steam, were $50, not $60 as was standard on consoles even then. Why? The commonly accepted reason was that since these digitally distributed games did not have manufacturing and shipping costs as discs did, the publishers and devs were passing the savings on to consumers. Aww. How heartwarming. Except that today, PC games start at $60 releases, same as consoles, which by the by have also embraced digital market places. What happened that negated those savings? Nothing happened, because it was a lie all along. The truth is that publishers thought that the PC market was barely worth selling to, and had a reduced price because they thought it was what was needed to be able to sell. This was also a time when publishers blamed all their ills of unprofitability on the evils of PC game pirating.
What happened when PC sales rose, thanks in part to being the home of a reborn indie scene? They jacked that price right up to standard and pocketed the extra $10. Because it was never about piracy. It was never about costs to produce and distribute. It was always, and will always, be about what they think they can sell it for.
And today, when publishers cry about money lost on sales and bemoan the costs of modern production. It's lies. It was lies in the past, it is lies now. But let us assume it's true. Here is the truth if what they say is true: THEY ARE DOING BUSINESS WRONG. As established a few paragraphs back, selling below your costs is bad business. Publishers say that prices have to rise above their costs. Even as a truth, that's a lie, because there's another solution: DON'T SPEND SO MUCH. And I don't mean cut salaries, I mean quit hiring more and more people onto single projects. Publishers have a choice, they can choose to continue creating and growing behemoths in the New Hollywood blockbuster model of putting all your money into a few big ticket items and making big money out of them, or they can choose to spread their resources among several, smaller projects which do not cost so much individually. A AAA game can have thousands of people working on it over its lifespan. That's the publishers' choice, to concentrate their personnel into phenomenally huge gambles.
By essentially gaslighting consumers into believing that they are to blame for a consistent rise in production costs, rather than practice restraint in their pursuit of big payouts, publishers are attempting to raise prices, in the same way they've justified microtransactions and lootboxes in the past (and for those with short or young memories: the publishers used to argue that PC piracy is why microtransactions and DLC were industrial changes needed to make up lost sales; it was lies then, and it is lies now, just with a different boogeyman). Don't believe them. They lied about piracy, they lied about microtransactions, they're lying (or in the cases of certain indie devs, simply economically ignorant) about the impact of sales and the price needed for games. The price for games is what we, the consumers, are willing to pay, whether that's $60 or $5. We have the power here, and they hate that. Really think of the term "cash cow", and realize that if the hyperconsumerist publishers had their way, they really would prefer that we be corralled into cubicles and money extracted from us directly at constant intervals. And that they'd still want more.
In short: fuck publishers, pay the price that you're willing for games, and fuck anybody who tries to tell you that companies and corporations need your money like you're a Renaissance patron of the arts. It is not a question of whether sales for games are "sustainable", it is a question of if game production costs are "sustainable". If people will not pay you enough for your product to meet your production costs, I'm sorry ladies and gentlemen, you simply do not have a viable production. That is the producer's fault, not the consumers. That goes for both big games and indie.