I am not a businessman, just a gamer. I find completely absurd that you need a team of 500, and then a team of 7 delivers Hollow Knight. I had way more fun with that game than with any AAA.
Isn't this true for any type of (software) development though? Once the size of an organization grows, everything slows down because processes are formalized, hierarchy is created, etc. This all becomes worse once a company goes public.
When WhatsApp was acquired, they had around 50 employees. By now, it's around 1500. It's still just a messaging app.
Quern was 4 people and Forgotten City was just a handful as well.
You need the team of 500 to do the "telemetry" and microtransactions parts.
The game industry has merged with the gaming industry.