I'm not making excuses for any of the major console platform holders who have been raising prices the last 5+ years, including most recently Microsoft just this last week. But it does need to be continually pointed out that monetarily speaking, games and consoles have never been cheaper, adjusted for inflation.
For example, the SNES launched in North America for $199.99. Adjusted for inflation, that would make it $468 today. And certainly, we can easily imagine the margins for Nintendo on a $200 sale back in 1991 would have been much higher, given how cheap materials were to manufacture those machines back then. It was just an entirely different world. Games were built with teams numbering in the single digits, and a million dollar budget was considered "large".
It is odd if you zoom out and see how expensive everything else we buy nowadays is, that we expect consoles and games to never, ever go up in cost.