Games industry is like any other industry really, it's eventually saturated by businesses to capacity that the market can bear, and they fight it out for their slice of the pie and with too many businesses fighting not all survive.
We hold the gaming industry sacred for some reason, we shouldn't really, it's no different from something like a butcher going bankrupt in a town where there's too many butchers.
Theyre spending un-godly amounts on games these days with all the CGI work and Voice acting, thinking their makeing films.... when in fact its just usually over the top cutscenes that really arnt as needed as they seem to think.
I agree, basically it seems like that sort of thing is used to appeal to the casual audience and rake in a lot of "safe" sales. While it's expensive to invest in initially it has a fairly reliable and predictable ROI which is what you want with very large investments, no risk.
A much better use of resources is to have some artistic freedom and run with some new and clever ideas, look at things like DayZ and minecraft, both very high success and popularity relative to the effort to make.
It would be nice to see a gaming crash and have gaming go back to its roots, that would be fantastic, I'd pick 1 minecraft over 1000 CoD games, every time.