> A lot of them will fail, but if a few are extremely successful, they could make up for the failures. It kind of felt like the studios were doing this for a while (Grow Home, Little Nightmares) but my sense is that it has kind of stopped?

I think the problem comes from marketing budgets. For any given game a marketing budget can push some amount of sales, but applying a marketing budget to each game makes it much harder for the winners to make up losses on the rest.

Small releases also need to be 'lean' releases; management overhead is another cost that's hard to make up in scale.

Combined, large developers don't have any natural advantage at making small to mid-scale games, and their structures impose fixed costs that are hard to avoid. It would almost be better for large developers to get indie-scale games by funding partners who act outside of the corporate structure, but anybody can do that.

Hearthstone (Blizzard) is another rare exception of an indie-scale, in-house game that was a breakout hit that could not have come from the outside (because of the IP involved), but even that existed because it started as a "closet-scale" project with senior developers who insulated themselves from management pressures.

> The lottery definitely has worse odds, I just don't think that's saying much.

Absolutely. People tend to assume that 95% of video games turn a profit, when it's the reverse. There are highly polished, incredibly high quality video games who simply just don't sell.