Honestly, the solution(s) should be rather simple.
1) Stop making every game in your library a AAA product. The next consoles will focus on on-line distribution more than ever, allowing for more sales of indie-type products with budgets to match. Even major publishers need to look at balancing their portfolios better between the $30 million dollar mega projects and the $1-5 million dollar experimental projects.
2) Use unified engine development across major titles. Its amazing that a company can spend tens of millions of dollars creating a game world, then fail to re-use few assets in any other titles. I know that some of the major companies have their own engines, but it needs to be more extensive. Once they make Grand Theft Auto V, whats stopping them from releasing 2-3 more titles at $15-20 each that re-use a lot of the assets, but are different games overall? (e.g. a racing game, or heck, a quasi-RPG). Look at what Bethesda does with their library - they used the same engine for Oblivion, FO3, and FO:NV with small modifications, and sold well north of 10 million units using the same engine across the games.
Developers and publishers need to see the writing on the wall and realize that the arms race will only lead to more bankruptcies, and look more towards the TV/Movie model of creating a wide range of products for the user base, rather than assume every game must be AAA.
Back from the dead, I'm afraid.
