"AAA is dead"

Just from this year:

Resident Evil 4, 93 Metascore:
https://www.metacritic.com/game/playstation-5/resident-evil-4
Street Fighter 6, 92 Metascore:
https://www.metacritic.com/game/playstation-5/street-fighter-6?ref=hp
Tears of the Kingdom, 95 Metascore:
https://www.metacritic.com/game/switch/the-legend-of-zelda-tears-of-the-kingdom
Diablo 4, 88 Metascore (even higher on consoles, 89 and 92):
https://www.metacritic.com/game/pc/diablo-iv?ref=hp
Do you think Final Fantasy XVI won't be just as good?
Hogwarts Legacy, 84 Metascore:
https://www.metacritic.com/game/playstation-5/hogwarts-legacy
Star Wars Jedi: Survivor, 85 Metascore:
https://www.metacritic.com/game/playstation-5/star-wars-jedi-survivor

And that's just the first half of the year.

Of course there are duds like Forspoken or Redfall, but that doesn't mean the whole industry is dead now.

Every year has a few duds and a bunch of worth playing peaces of excellence.

It will only greatly reduce if there is a massive reduction in sales of AAA games or the games are developed for less platforms. The chance of either happening is slim.
Nintendo has over 15 billion USD in the bank and almost all their games are AA or so in terms of specs considering they can't even compete with a PS4 or Xbox One in the specs department. Nintendo has every reason to delay their games for more polish.
Some of the other publishers have massive cash on hand as well, but they're far hastier. Even Nintendo is guilty of being hasty with Pokemon games. Scarlet and Violet would be more polished if it launched in the first half of 2023, or even if it was saved all the way until Holiday 2023.

Budget of a game is not tied with console's specs.

Unless the project is seriously ambitious like zelda i would imagine it's significantly cheaper to make games that don't push cutting edge graphics and still considered to be high quality games.  

 But it is doing physics systems all in one game no one else is atm and some thought it not possible even on 9th gen consoles. Some of that might be built in-house and other parts licensed physics engines.  A lot of trees in video games are from a licensed software company.

I said aside from zelda which is super ambitious. almost every other 99% of AAA game if they had to make games in switch levels specs it would be much cheaper. Zelda is using the havoc physics engine. what makes it so impressive is that its doing so many things with out breaking the game in massive open world. zelda with cutting edge graphics would bankrupt most developers. any developer that thought it could be done on current gen has no clue what they are talking about lol. Some of those comments were made by writers and not coders. Just watch a physics engine video of just cause 4. not to mention to average Japanese game developers  get paid peanuts compared to the US. Just Cause 4 is probably the most advanced physics engine aside from zelda and did not even cover development costs,  it failed. so nintedno is only one pushing physics gameplay at the moment.  

Some of those were broken at launch though (at least the PC version). That more suggests that reviewers don't mind buggy launches, not that games aren't released in a bad state.

Star Wars Jedi: Survivor got a much lower score on PC for that very reason. But the link I posted is for the PS5 version.

I'd hope to see Uncle Phil naked in front of a fireplace to apologize for Redfall