The 7th generation wiped out many, many mid-level developers. If you were to look at the industry 20 years ago, it was made up of mostly moderately wealthy companies and a few multibillion dollar companies. Most startup companies mostly had the intentions of becoming like Midway or Acclaim in a few short years rather than simply being an indie company. These days, you either have big publishing companies or indie developers. Most of the mid-level developers have closed their doors and most of the ones who remain are beholden to large publishers because they lack the finances to publish their own games.
What really happened is sort of nobody's fault and everyone's fault. The industry was not prepared for the HD era. Publishers years ago could afford to make a few mistakes before they stuck gold. When the 7th generation came along, one big mistake could put a company with a 20 year history out of business. Companies like EA, Activision, or Nintendo could survive one big bomb. However, companies like Midway or THQ could not.
It sucks for the consumers because it gives us less choice. For example, almost 15 years ago, You had popular games like GTA, but then you had a bunch of GTA clones. Metal Gear Solid was popular and that spawned a bunch of stealth action games. Most of these clones weren't as good as the original game, but at least consumers could decide what is best and other ideas could thrive. In today's environment, you either have GTA and not much else or Metal Gear Solid and not much else and many publishers would need a lot of convincing to green light anything that might be remotely risky.
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