The outrage! Maybe there is no profit in printing a few discs for a budget title? Maybe retailers wouldn't stock it? Who knows.
Or maybe you let the publisher figure it out and take the risk themselves on the quantity they want as they see fit?
Who knows? It says right there, publishing policies. Not lack of profit for the publisher, not problems with retailers, publishing policies. So we do know.
I wonder how many people were actually going to buy this physical copy for XB1.
I personally consider it the "ultimate" version of the game because of the superior exclusive content, so yeah, I was going to buy it as my choice of physical copy to complement the other digital versions I already have.
I have no idea what work on MS's side needs to be done to get these 50k or so copies printed, but I'm guessing they've done the internal calculations and probably the cost and time expense to their ID@Xbox team probably outweighs the minimal profits they would see from selling up to or even less than 50k copies of a game. We also have to consider opportunity cost - the time and money they spend on getting 50k of Shovel Knight printed, they probably feel could be spent on other things that will provide much more profit than these few physical copies will. Pleasing those <50k fans really is pretty insignificant to them and would gain them nothing.
EDIT: Anywhere I said 50k should be "Less than 50k" since Yacht Club doesn't seem like it even wants to print that many for an initial run.
Well, at the end of the day it's their decision. You are right, by itself their cut of the profits is peanuts.
But the future of multiple markets these days run through highly specialized, boutique products, and letting small content providers provide very specific content. Music, movies, art prints, posters, has all been converging to a prolific method of delivery with low print runs. One game doesn't make a difference. Dozens, hundreds, thousands might, and once again they are lagging on allowing for that kind of product as the market shifts.
They are saying their platform does not agree with that kind of approach, and I think it sucks.
If the problem is that approving and working with the publisher to print 3, 4, 5 thousand copies is too much work, then they need to rethink the bureaucracies of allowing physical print runs in the first place. If the competition can let literally ONE guy print 2000 copies of a PS4 game and 3000 copies of a Vita game because he felt like it, then there has to be a way to streamline the publishing process enough that it's costless for them.