It’s confusing to you that manufacturing, shipping, and selling physical copies of a game was more expensive than digital distribution?

That is not what is confusing to me.

Digital distribution is the norm and everybody knows you don’t need 30% to make it sustainable.

I'm not sure I buy this. Epic's 12% is the bare minimum just to cover basic infrastructure costs for distributing modern AAA games. It doesn't even include transaction fees, which vary based on which payment method the user selects (whereas Steam and other storefronts eat these as part of their 30% cut).

Simply sustaining your existing platform is also not enough. Where Epic runs a barebones storefront and client with little in the way of useful features beyond "download game and keep it updated", storefronts like GOG and Steam take their actual profit and re-invest it in improving their platform for everyone. Think of all the time and money that goes into making things like Steam Input, Proton, or even GOG themselves fixing up older games for modern PCs.

The fact that it has been 5 years and Epic still hasn't been able to make their 12% cut break even speaks volumes.