Gotta be economics of scale and disc media. Cartridges and older media were much more expensive by comparison and had limited production runs.

Suddenly compact disc comes along and dozens of manufacturers are printing them for pennies at a time with production lines that could scale up or down as you required.

The readers and the tech behind them was ubiquitous and even for the added complexity, you only needed one disk reader on each console, whereas carts had a bunch of redundant hardware that had to be copied for thousands upon thousands of copies.

Now digital copies are even cheaper, and disk drives are less space and speed efficient so print runs are scaling down and manufacturers are charging more. All the while, physical access to software has tangible downsides to publishers such as sharing games and making copies (since drives are, again, ubiquitous) so they're frontloading the price of physical games to offset this reality.