Most people always come back to the argument that you can make a cheap good game on the Wii that will sell 500k units and you will be profitable too , totally ignoring the financial strain the publishers and developers have to work with...
EA revenue for the year 2008 was 4 billion $ and they lost 96 million$ on that ( non GAAP).
To reach that they had 31 titles sell over 1 million units...
Do you even realize how many 500k title they would have to release to make that kind of revenue ?
Answer is definitly more than the market could absorb...
They don't have a choice, they need big games that sells millions copies to survive. And multi million selling third party games are just not easy to come up with especially on the Wii...
PS : I guess someone is going to argue they could always fire 75% of their staff and focus on smaller gamers, yeah, right that would be really good, firing tens of thousands of game developers...