If everyone adopts the same game engines and assets become cheap and easy to produce, could there be a renaissance of small gaming studios that are sustainable and pay competitive wages?
There's no way to "fix" the laws of supply and demand. Making games is a lot of people's dream jobs. People are willing to take a pay cut and worker longer hours to have a job in the game development industry. Same reason why you have aspiring actors working tables to make ends meet.
Let's say each game needs to sell 100000 copies to be profitable. If you make more games you need to sell more copies. The amount of games people buy doesn't increase simply because there are more games. Lots of people buy one or two games and play them for a long time. So eventually you end up in a situation where you have 1000 games (must sell 100 million copies) but only 50 million customers are willing to buy stuff.
If everyone adopts the same game engines and assets become cheap and easy to produce, could there be a renaissance of small gaming studios that are sustainable and pay competitive wages?
What's the blocker? Why aren't things better?