No, this 'Blockbuster or Bust" mentality is what is killing the industry. Can you imagine a movie industry where every movie had to be a huge summer blockbuster with all the explosions, stunts, and big actors?! Even script writers would become minor celebs. Anything that brings in less than $200 million will simply not do! It's madness. This addiction to huge risk/huge rewards means all but the biggest publishers will die.
Publishers need to acknowledge small but passionate niche markets, More JRPGs! More RTS! More Point and Click Adventures! More Horror! Those titles will sell, just not blockbuster numbers. If those games are made with a reasonable budget they will make a nice stable profit. They will negate some of the risk that bigger titles bring.
Look at Telltale Games. No one scoffs at the graphics in their games, some even call them beautiful. They are able to make games at a reasonable budget and have no trouble selling games. Make lower budget games and sell them for $40. People will buy especially in niche markets. Not much competition there.
TLDR; mid-tier games need to come back.
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