I think he means that if a game isn't profitable at 2.5 million than it has too big of a budget.
But on the other hand, this doesn't say the game didn't make a profit, just that sales were lackluster and down significantly from the first. It's entirely possible that the game was profitable, just not nearly as much as they hoped for.
He might have meant that but his example didn't put anything in perspective at all. For one, a third-party game is always going to have more overhead than a first-party game. More importantly, no one is in business to "match production costs". I often come across posts where people act like breaking even is a success. It's not. In business, breaking even is essentially the same as a loss. Even a moderate profit can be viewed as a loss in the big picture.