The cost of making AAA games, adjusting for inflation, has gone up dramatically. The comparison to hardware doesn't really make sense, as the production cost of video games is almost entirely labor, which does not have the same falling costs that manufacturing does. There used to be more meaningful manufacturing and distribution costs, but burning and shipping discs/cartridges was not a substantial enough portion of the cost of games to really matter here.

Budgets have gone up a TON, like between 10-100x depending on the type of game, over the last 20 years. The revenue they generate from retail has not grown as much. That is to say that while profits are higher in general as a result of the industry being larger, profit margin has shrunk. This is part of the reason that the use of microtransactions has exploded (like you said, to increase the "real" cost of the game above $60), and it's also why diversity and risk among AAAs has decreased, with fewer, safer games being released, and a heavy focus on multiplayer games that will generate stable revenue for a long period of time.