It seems to be going in an interesting direction. One of the reasons I never complain about games like CoD or Assassin's Creed, even though I don't play them, is because they finance the industry. They let publishers try other things.
We're also seeing a renewed interest in the "middle", with some small studios taking on larger projects and some big publishers taking on smaller projects. The middle died because publishers were asking $60 for games that were clearly not on the same level as the heavy hitters--downloadable titles at different price-points seem to be addressing that mistake.
As far as studios closing, that's always been the case and always will be the case. The NES was death to many studios and yet here we are.








