It comes with a cartridge? I wasn't aware of that.
String and rubber bands are even cheaper. Look at the price of a Google Cardboard which comes with lenses and other parts other than cardboard.
The Labo games are probably going to be short/basic games, something like Wii Sports, so I still don't think the price tag is justified.
I'm speaking sorta generally here, but your comments made me think. Yeah, $70 dollars seems a bit steep, but people dropped $90 USD on Wii Fit in the middle of a recession, and it went on to become a best seller.
As for the games, we won't know what they will be like until we see some actual gameplay, but I'd wager it will be more like Nintendo Land and have longer, arcade-style games. Knowing Nintendo, I don't think they would settle for selling tech demos with cardboard peripherals. With that said, the cardboard peripherals are the primary appeal of the Labo, or it least it seems that way by looking at the Nintendo Direct announcement.
If the Labo software turns out to be anything like Wii Sports, that would be a good thing. Wii Sports was a pretty important title for the Wii, helped market the system's capabilities, and had lasting appeal long after its release date. It's basically all me any my friends did for multiplayer on the system until Brawl came out. With that said, Wii Sports was a pack-in, and whether or not people will buy $70-80 (probably singleplayer?) Labo kits in addition to the $350 Switch remains to be seen.
Who knows though. Nintendo isn't above messing up with weird experiments (I'm looking at you, e-Reader). I could see the Labo being a screwup, but I think it's more likely it will take off for the system's audience. I dunno, but I think Nintendo deserves a little more credit than just writing the Labo off as a bunch of "Barney's bag arts n crafts projects for kids" (quoting a friend of mine who had me in stitches with that remark).