The development teams will go both ways. Not just get smaller. The same thing happened with TV production. There are shows now days with bigger budget productions than ever such as HBO shows and Lost etc. and then there are shows that try to be as low budget as possible like reality tv shows and such. There is no one winning business model which this guy seems to indicate. Either form can bring success or failure. Just one takes on a higher risk but also has a higher potential and probability while the other is low risk but generally has much less potential.