Sounds like they're afraid of things ending up like the mobile market. Seems like a reasonable fear.

I understand their fear. Heck, most people I know just wait for complete editions of games or download it because they don't care how much money a company gets.

Then why do so many great games sell poorly?

Additionally, can the industry survive off of only the sales of great games? Take away the profit from all of the "good" games and do you have enough to maintain a business? Do you have enough to take risks in that business? What about smaller games like indies...do you not think that the Steam sale mentality hurts developers and in some cases, players? What about when storefronts like GOG make statements like:

"Selling games at too high a discount - one often sees discounts above 80 per cent off here and there - sends a message to gamers: this game, simply put, isn't worth very much," the pair said.

http://www.eurogamer.net/articles/2012-04-12-gog-com-steam-sales-send-wrong-message-to-gamers

What about when devs say that steam sales hurt their player base by cutting off the games chances to be in a lot of people's hands on day one and rewarding those who wait instead of early adopters?

http://thecastledoctrine.net/seedBlogs.php?action=display_post&post_id=jasonrohrer_1389812989_0&show_author=1&show_date=1

Its not hard to see the negative effect of devaluing games, from big companies shying away from taking risks to indies being forced to sell their games for pennies or be ignored...

It's not. When you buy physical you get the disc, the case, ability to do whatever you want with the game after you bought it (lend it to a friend, sell it).

not to mention that everything sold on PSN/XBL/whatever nintendo has, they save money on:

1) Making the physical things, aka the disc, the case, the manual and such.

2) Shipping all those things to retailers.

3) They get the extra money that retailers normally earn when they sell games. (The big three get it)

First off, smaller games like indies cost or should cost less to make than AAA games. And not every AAA game has a ridiculously big budget. Just look at games like Demon souls. The devs that have issues with steam sales, should simply release on consoles cause at least there its easier to control prices and theer is less price competition. 

I could go on, but really lack the patience to be more detailed.

Its not about making sure that wallets are broken, but keeping the negative effects of these practices low. That is why I used PSN Plus an example. Its great for consumers, but do we really want to groom the habit of waiting on games to be free or almost free before purchase? Great games with a popular brand behind them sell. Valkyrie Chronicles and Bayonetta are generally agreed to excellent games that managed a mill + only after hitting bargain bin events several times.  

SEGA also are doing the 3D classics in which they take their legacy games and break them down and rebuild them from scratch in 3D. They even built a digital console for this. These games are priced a 5 bucks and ppl are complaining they're too expensive... Really!?. Wheres that coming from? The mobile market mindset... games like these should free or a buck, with anything over 10 bucks expensive no matter the quality. 

Im not saying everything should be 60 bucks period !!!!  But the industry is being overly agressive this stuff.

Actually it pricing is very interesting and I think it is a problem

So for me, when I buy a game on PC, I expect a 50% + discount at the very least, because that's the way that Steam has trained me

Likewise on PS4 etc I expect the price to fall over time, such that I can get games quite cheap. I've definitely noticed digital games catching up with more frequent sales to compete with the likes of amazon who do discount older products

But Nintendo are different. I've been thinking about importing a new 3DS from Australia (to the UK) and so started to look at game prices. They're all £30! There has been no decline in value and it's interesting to see if they can maintain those standards

But I definitely agree that Steam sales are eroding my valuation of older games. I'm okay paying full price for a brand new game, though that full price does seem to vary from game to game. Shadows of Mordor ~£40 console, £30 PC. FIFA £50 console (dunno PC). Dragon Age £40 everything

While it is fair to have a variable price, I really don't think that everyone has worked out the best way to price things overall

There is always more to these things than meets the eye. The industry isn't agrressively discounting everything cause they like selling games for less, they are discounting everything cause the base cost of games are higher than most people are wiling to spend. Meaning that even though some won't admit it, at $60 a pop they buy less games than they would at $40. 

When people are posed with having to spend $60 per game, of course they are gonna get more selective and thrifty with their game purchases. So before they start complaining baout discounts, they need to first aknowlege that games cost quite a bit to begin with. Its only natural that if people are going to spend $60 for a game, they would demand either extereme quality, popularity or they would take a wait and see approach.

As for VC and bayonetta... the funny thing is that both of thosegames sufer from the same SEGA stupidity. New IPs don't typically sell a lot more than 2M at first and then word of mouth and used sales expose the IP to more gamers down the road. SEGA stupidly either pulled direct support for the games (Bayonetta) or/and they switched the game from what would have been its primary platform (both). You don't do that. If Bayonetta 2 was released on all three platforms, theer is no doubt thatit would have gone on to sell at least 3M units across all platforms. But they ditched the core user bases that supported the original and released it on a struggling platform, what do you expect? And don't get me started on VC. Sometimes (read most times) these publishers shoot themselves in the foot then cme back bitching about it.

I guess that explains why there is no Smash bundle.

Yes, smaller games cost less, but they also are often funded out of the pocket of the guys making the game, who live like starving artists and spend their life savings on their dream. I can't imagine that it feels too good when someone looks at years of your life and tens or hundreds of thousands of dollars out of your pocket and says "10 dollars is too expensive, I'll buy it when it costs 1$".

Also, there are a lot of additional costs and hurdles when it comes to releasing games on consoles. You have to purchase a dev kit and get your game rated by the ESRB, both of which cost a non-insignificant amount of money. You also have to follow certain protocols that those consoles may make you adhere to and work within a specific box of boundaries and develop a game for a controller etc.

This isn't an issue to be brushed off...

I do think that more AAA games should operate under a lesser budget, but that is a whole other discussion...

The problem is that the industry is incentivizing and rewarding this penny pinching behaviour. It is conditioning gamers to be cheap bastards and rewarding them for doing so. This starts at games that are broken on release day (punishing early adopters) and ends at the ridiculous sales that condition gamers to wait.

The problem falls more on the low end (ie 10$ is too much, I'll wait until it is $1) but it affects everyone making games in the industry...