This same problem exists with e-books as well (I know with e-books, digital distribution maximally cuts about 30% off the price of publishing a book; yet, you will find many e-books priced more than their physical counterparts. Go figure that one out.). I don't think it's a problem of arrogance on the part of the game publishers. I think it's just ignorance and incompetence. The executives in charge of content publishing, in general, simply prove to be ignorant of technology and how to use it, and they prove to be incompetent when it comes to actually understanding the market they are trying to serve and finding profitable ways to serve that market in a manner that ensures the loyalty and satisfaction of that market. They're just idiots, and they have no adaptability to changing market conditions.
Really, I think the only way to change the situation is for the old guard to just go out of business, and a new, younger guard, one that does understand its market better and has fresh ideas, rise up to take its place. Sometimes, for evolution to progress, you have to hit the planet with an asteroid and kill off all the dinosaurs. The game industry needs a serious hard crash, just like in the 80's.
Personally, I've been losing all interest in video games as of late. There's just too much bullshit and too little quality, creative diversity, and emotional spirit in today's games to make video gaming, as a hobby, worth the investment of time, effort, and money. Back in the day, it was not unusual for me to buy 2 games in one month, averaged over 6 months. Now, I barely buy a game every 6-8 months, averaged over 5 years. It's just not worth it anymore.