I think the best way to keep quality up is to stay small. Supergiant Games is a great example of this approach. Once you have a massive publisher and expectations to ship AAA (or, heaven forbid, AAAA) games it's usually just a matter of time.
Timur Bekmambetov might be a more recent example. The Night Watch movies were wonderful. Then he made Wanted, which was expensive dross. The best thing about that movie is that he put a couple actors from Night Watch as supporting cast in it. He’s done one or two things since that rate mention, but going Hollywood made him worse, not better.
I think besides increased funding there is also a common problem where creative leads become blinded by their own past success and start ignoring critical feedback.
Having to ship AAA games isn’t the problem. The problem is the incessant need to only focus on live service games so that they can milk their consumer left and right. Studio executives come in with unrealistic sales expectations, which then means you can only try and make games that have a live service component to generate a constant revenue stream, which then means you can’t make good games anymore. You’re either making games that are similar to other and get lost in the crowd or are forced to differentiate by promising something that’s never done before, which adds scope, risk and budget to the game.
If you noticed all AAA failures in recent times, almost all of them were live service games. Meanwhile the single player market seems to have finally recovering from the neglect it’s gotten in the last decade.
Also, look at the BioWare successes and failures. They did well when they did single player games, failed when they ventured into live service.
That's because almost all of them were live service games anyway. Do not put the chicken before the egg.
They are very selective and you need to come at them with a fully formed game idea but once you get in it's completely hands off. No managers breathing down you neck, all you have to do is ship on time and they take care of the rest.
You get enough funding to grow your team, make a big project and go fully independent as a mid size studio if it's successful enough.
Yes, but it's also rational for founders to sell a successful small studio when they can.