Actually not...I do stuff with intellectual property for a living, including replication management and licensing for music and film.
DVDs in retail packaging (cased, 4/0 cover, 4 color disc face, shrinked, top spine label, etc.) can cost well below 50 cents when produced in very large quantities. The last batch I had made came in at about $1.05 a disc, and was a short run for a small publisher.
As for old films: The publisher/studio is contractually bound to pay residuals/reuse on DVDs for the entire life of the copyright. SAG/DGA/WGA want their (pitifully small) cut. For the soundtrack, the AFM wants their cut. IATSE also gets a cut, which helps fund pension and health plans. This list goes on.
The point is, a certain amount of money does, in fact, flow to the original artists.