Let's not bullshit each other, this is Microsoft we're talking about. They're probably using their own, well equipped cloud services and the bandwidth cost is going to be really low, and the downloads in comparison to their free download centre for Windows applications and utilities will be relatively low. We're probably talking not much more than $0.30-$0.60 per retail download, not particularly higher than the cost of a good quality dual layer printed Blu-Ray disc, case, and manual/informational leaflets (and lets not forget logistics). And since there's no retailer taking a chunk out of the money for Microsoft-published games, then yes, Microsoft could charge much less if they wanted to.
It's all just exploitation, if you ask me. They know a large number of people won't be put off by the prices, so they'll hike them up to make a bit of extra cash.
