Quote Originally Posted by TonyTheTiger View Post
Thing is, we have to define "collapse." I don't think anyone is arguing that the likely outcome will be as catastrophic as no games ever again! That's not quite what happened during the crash of '83, either. People are just arguing that if things keep going the way they are then at some point it's going to trip over itself enough so that there's going to be a mass cleaning and restructuring that will see more studio closings (seriously, tons have fallen this past generation) and the smart publishers and developers adapting to the changing landscape. This article is about a different but tangentially related issue and makes some great points on the subject.
In theory though, if the big publishers take the advice of many of these articles and focus on more niche and lower budget approaches to game making, it's possible the large numbers of gamers who like the bigger budget games could become bored and simply move on to some other form of entertainment. The big publishers could in fact face financial collapse by doing the very thing you are advocating as the overall video game market could contract as a result of a lack of compelling big budget content.

To your other point, I personally see studio closings as a good thing as it tends to weed out those that release mediocre title after mediocre title and the most talented members of those teams go somewhere else, hopefully to create the great games they are capable of creating. Compelling IP ends up getting resold or licensed to others and again the cream rises.