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The budget is also a marketing ploy. The average person hears about a game costing hundreds of millions to make and they think “well then, it MUST be good”. It’s more or a pissing contest among publishers. Most of that budget does indeed go to marketing and executive wages/bonuses.
And from the publisher’s perspectives, that’s really a good investment of the budget, because it doesn’t just drive up sales. It also cultivates customer loyalty and fanboyism (e.g. “we are spending all that money because we believe in the game, and we want to give our loyal fans the best experience possible” is a very common line in pre-release interviews).
For example, there’s a false equivalency among gamers, propagated by this kind of propaganda: “I have to pay the high prices and engage in microtransactions/DLC, because that supports the game developers and their high budgets”. In reality, the people who actually make the game see very little of that money. Their wages, in most instances, are shit and do not reflect the hours they put in. However, gamers rarely want to understand that, and instead extend the publisher pissing contest among themselves (“the game I’m playing now spent more money than the game you are playing, therefore it’s the superior product”).
50 dollars were console games. On PC you’d often find the same game at 30 dollars (disk) or 20 dollars (steam) on release. The difference was due to console makers taking a standard fee cut from every sale.
The first AAA games back then to be released at 40 and 50 dollars on PC were COD MW1 and BF3, which set the trend for all other games since then. This was pure profit for the publishers, since there was no cut for console makers on PC. And before you say it, no, the Steam cut back then wasn’t even comparable (much less since it was a % cut and not a standard fee). In fact Steam hiked their cut because of the price hike triggered by EA and Activision, which is what then made EA pull their games off Steam and create Origin.