[Disc pressing vs ROM costs] That's the underlying issue. When optical media can cost less than a dollar compared to flash memory which will cost significantly more. Lego City Undercover is around 20GB, I'd be curious in how much it would cost to produce cartridge versions.
OK I got curious so I went looking.
http://www.pure-music.co.uk/dvd-manufacturing-costs/dvd-disc-only/
DVD disc only run of 2000 is £790.00 or just shy of 40 pence a disc. Granted that is a tiny run but for the sake of argument can we say full DVD, case and all is not that much worse for the far higher volumes seen with games?
http://www.pacificdisc.com/PricingBluRay.html has blu ray though and that pumps the price up a bit (1000 discs is 2.55 USD a disc plus setup costs). Not sure if we are quite competitive yet but I will run with it. More than I thought it would be as well and I might have accidentally included BD security licensing costs in the mix.
It seems the mask rom stuff has dropped off in recent years and what remains (at least open to my basic search) is almost exclusively for integrated circuits where more than about 50 megs of space is insane.
http://www.alibaba.com/showroom/mask-rom.html has fractional sizes about in line or even a bit less than BD. This is also fairly low output (10K pcs a week) compared to what I imagine games will be need.
Switching over to NAND to see if I can pump the space up a bit.
http://www.alibaba.com/product-gs/556428706/Potevio_Taiwan_16GB_32GB_COB_Board.html
1 million a month at the sizes required and prices seemingly in line with the BD above (1.5 dollars to 7.5 dollars, no idea on the split).
That is just for the chips though and assembly will need to be added on top. Sadly I could not find any decent bill of materials breakdowns for relevant devices as that would have been nice, I did not look that hard though.
Still a case might be made at this point.