I buy generic cereal... Because I'd rather get 1 1/2 pounds for $3-4 instead of 12 ounces in a fancy box. The minute difference in taste is not worth throwing that much money away.
In any case, that is really a terrible analogy for the console vs. PC debate. If console games were always half price for only slightly worse graphics/controls/etc. because they don't spend more than the cost of production on advertising, I WOULD BE A CONSOLE GAMER. Barring the increased cost of wanting to have the horsepower for all the graphical bells and whistles, PC gaming can actually be cheaper than consoles. With so much competition in digital distribution these days (not to mention the admirable few publishers who still do the $40 and $50 base price point on PC) the same game that costs $60 on a console can cost you $10-30 less.