Mehhh...
Maybe some devs tried too hard and invested too much money they never had the chance to get back and closed but I'm sure that we wouldn't have more people working in this industry if many companies wouldn't try to push for graphics.
We have many many people working for companies not pushing for graphics and we have many working for those who do. That's the good thing about the market nowadays, you have both and with that we see a huge number of game devs and employees.
I doubt we would have even more people working in this industry if EA, Ubisoft and some other companies wouldn't push for better graphics. Maybe we would have some more devs but these devs would have a smaller number of employees.
And a company like Crytek is in parts only really a big thing because of their graphics. If they fucked something up the last years doesn't change that they would have never even opened all the different studios without them releasing games like Crysis.
We have probably also lost 90% of all car manufacturers which opened in the first 20 years when that market got big. That also doesn't mean much except for that it's a pretty normal thing that new industries often lose a lot of those who tried to be part of it and only a few big ones stay alive.











