I know, my post was kind of harsh but its what I believe. Most game companies are now such huge entities they really cant afford to make big mistakes. Kinda like the housing market "too big to fail" or whatever.
No, it's not even that though. There is an incredible amount of uncertainty in the market because there is a lot of innovation. The issue is that the innovation right now is focused on game engines. Once game engines become a lot more sophisticated, and the hardware is able to catch up to them, game designers and artists will be able to work on a project a lot more freely. Once this happens, development costs should actually decrease because less time needs to be spent on optimization.
The problem is that there are several questions right now which are unanswered:
As Sony and MS prepare to unveil their hardware consoles for the 3rd/4th gen, what kind of limitations will the hardware have, how can the platforms be effectively monetized, and how much scalability will the platform have?
Development costs have sharply increased in the latter half of this decade, so much so that even games that sell a million don't even recoup their losses.
The "executive" problem mentioned isn't so much one like your typical bloated companies, (except for huge companies like MS with so many departments all over the place), but one of just simple cost. As gamers demand games with higher and higher value, how do you maximize gains?
Right now, development costs are focused around optimization and game design pivots around that. So graphics are the most immediate way to gauge a game's "quality" so lots of money is devoted to that particular aspect, leading the rest of the game behind.
The market is also incredibly competitive, but all the competition sees is a market devoted to increasing graphical capacity--and getting rewarded for it