From my experience there's a bit more dynamics in there. In particular the publishing agreements(I've been privy to a few) are structured in ways that the developer takes a substantial amount of risk and very rarely gains the reward of a breakout hit. Things like the first royalty doesn't come in until all development + marketing costs(which can be as much as dev) are paid back. Caps on payouts for companies or individual employees, etc.

The structure is much closer to what you see in the recording industry contracts , there's even been cases in the past of publishers denying milestone payments during peak burn to put the company into bankruptcy to gain the IP + source and then re-hire the dev-team back at 70% salary. Combine that with an robust supply of fresh faces trying to "break-in" it's not really a surprise the industry is the way it is.

If you're on the dev side of the industry you've got quite a few options to exit, if you're in art there's less options since a lot of adjacent industries have similar conditions(I've heard from past co-workers that the animation industry is even more brutal).

It's really a shame since there's some really fun technical problems to be solved and a lot of creativity but that ultimately gets exploited into the state it is today. It could be a better industry but it isn't. For those that want to build games I usually recommend doing it as a side project, there's a high probability that you can work on a genre you like(I never did during my time in industry) and you aren't subject to the state of the industry.