I'd love to join the crowd saying that the OP is well-written and persuasive, but in fact, I have to be as contradictory as he himself was in his first post. I hope therefore that he will humor me.
Rather than take his post in the order of points that he assigns to it, I see his post as basically two parts. There is the first part that "explains" to us why things must be as they are in gaming, and there is the second part that tries to convince us that this truly is the best state.
Part 1The first part of his argument, attempting to explain why gaming in this state, is rather superficial and trite. We all know why so many companies have taken this course. We toss around the word "sell-out" freely when speaking of companies like Creative Assembly and Bioware, which began with riskier and more innovative titles and have slowly crept toward blander mainstream fare with each new project. We speak openly of their chasing greater revenues at the expense of the core niche of gamers who bore them on our backs when they had vision and heart... so do we need to be instructed like children that mainstream companies seek primarily to make money? It was known. Our gripe was, in fact, that companies seek to go mainstream after promising starts in a niche that we subsidized with our dollars.
This is not about pragmatism. Smaller companies thrive everywhere, if pragmatism is your only battlecry. Small business is the largest sector of the economy. If feeding a family or even putting a few children through college is the sole worry, then a smaller company can and routinely does provide its employees with just those very means. Are the folks at Paradox malnourished because they haven't stripped down EU3 till it can be cross-published as a console title? In fact, I am sure the CEO does well enough in his niche to own even a luxury car or two. It is a choice to step outside an established and supportive niche to draw in greater revenues. It is a choice motivated by greed.
In short, OP has offered us a false dichotomy between "make ever-increasing profits" and "starve to death." Wrong.
Part 2So much for the first part, where OP describes the process of mainstreaming as natural and inevitable with few alternatives, implying that any criticism is therefore not practical. Now onto the second part, arguing that mainstreaming produces a better product. The general direction of this part is encapsulated in the following statement:
Money is the root of all progress and lack thereof.
This bold assertion is part of your worldview, for better or worse. Yet, if this is indeed so, why do we have so many government research grants? Why not let industry do all the granting of funds and shaping of research trends? Why did electronic computers grow from a government-funded project called ENIAC and not from a computing-machine company like IBM, which was content to invest in small tweaks to mechanical punch-card computing technology? Are you using a computer right now, or a punch-card machine? Why did the very Internet that you are now boldly opining across evolve from a public-sector defense project instead of a visionary corporation who could be cashing in to the tune of trillions on its ubiquity and increasing necessity right now. If money is at the root of all progress, then I would think that the very machine and the very medium used to advance that view would originate from a for-profit business entity!
Money blinds people. Money brings out what is mediocre and common in us. Money makes us punch the clock in and out. I could name more progress
stymied by risk-averse accountants than you could name
stemming from them.
I realize this latter part is down to one's worldview, but mine has been hammered out by experience. I've seen my share of scams in real life, seen what money does to people. I can't go back to the simplistic belief that money is some benevolent deity shaping progress. Companies who take the above route and shit on the expectations of people who aided and closely followed their early ascent are due their judgement day in the eyes of those former supporters.
End of line.