How do we reign back in the markets? It doesn't seem like consumer choice is working out very well.

consumer choice is working as intended. They are fine playing "free" games supported by the 1%, and many nowadays won't pay >5-10 dollars for a game unless it's from a very established IP.

Even without the mobile market, The story isn't much different. You either throw yourself out there in a sea of indie games, or you find a publisher to pitch and give your IP rights to in exchange for stability. The latter is just harder to do nowadays