Do you know how that compares to USB today?

I know enough to be dangerous.

I assume that whatever USB is doing is much simpler though, still making midi more expensive.

Basically we live in a silicon rich world compared to back then. Your vision of putting the ADC circuits in the peripheral is exactly what's done now with every game controller on the market. And no, USB is technically much more complicated since MIDI is just a serial data protocol whereas USB is a full-on bidirectional packet network. Yet silicon-wise, it's kind of same-y since the guts of these devices are one or two purpose-built chips for either USB or MIDI. Heck, they even use the same number of wires!

If you're wondering why MIDI devices today seem expensive despite rocking a 40+ year old communication standard, its because the cost is in everything else. As far as I understand, musical instruments (and anything else in that ecosystem) need rich, repeatable, and reliable tactile input with a decent duty cycle. They often need to be roadworthy, or put up with being run hard in a studio. But also there has always been kind of a premium attached to music stuff in general. Maybe lower production numbers of devices compared to game consoles? Maybe they're mostly professional or "prosumer" goods? I honestly never understood the big picture here.

Also, there's a trend of musicians going back to "control voltage" style synths, which is basically analog signal processing from the 70's and earlier (e.g. Moog). And feature-for-feature, that stuff is even more expensive. Go figure.

Maybe not though, and we’re missing out on some crazy joysticks?

I mean, people have demolished Dark Souls using a Guitar Hero guitar, and also using MIDI drumkits. So there's that. Anything's possible with the right silicon glue in play.