And that's without even getting into updates that provide extra content. Steam's flagship game, Team Fortress 2, updates at least once a month with extra (free) content. That generates mayor amounts of good will towards the devs, and it would be completely unsustainable if the developers had to pay $40k to update, and another $40k to fix any bugs or imbalances in the update.
We're talking about the XBox. There's only one hardware device to test against.
Also, the first update is free.