And things are supposed to get cheaper as technology and processes are improved (and N64 games were large complex cartridges that were expensive to produce).
Yes the quality of games has improved overall, but the market has also grown, meaning things like economy of scale and commodification typically come into play. Additionally the tooling for making games has been dramatically improved, digital art tools are better, game engines are pre packaged with a bow on top and development is (or can be) done in high level memory managed programming languages like c#. It’s easier than ever to make good games right now, every aspect of the process has increased with the scope of the games themselves.
Economy of scale, the market has grown with the scope of games and also, most games do not require a team of hundreds of people to develop.
I covered it in another comment, but game development is easier now than ever, many of gamings greatest hits in the modern era are made by teams of less than 10 full time workers or even completely solo.
The Atari developers didn’t have unity and Internet forums, they didn’t have managed programming languages, they didn’t have asset libraries, they didn’t have modern art toolchains and 3d modeling software with high level easy to use features.
Additionally, looking back at old games is looking with biased eyes. The tech was just as cutting edge as it is today, and the learning curve was steeper, it was harder to just get a computer, let alone, learn how to program one. The talent pool was smaller and it was harder to get funding for a game, the higher prices reflected that you were paying for niche software. That isn’t the case anymore.
And the argument doesn’t even make sense. Should a Blu-ray copy of avengers cost $500 because it cost hundreds of millions to make?