[pandaman]

It is. Some studios actually do this (e.g. Blizzard, High Moon, some had done it before they had been shut down). The problem is that Agile has been designed for a process at a service firm, one that does work for hire. As far as I understand, in that business you don't really want to ship. Instead of shipping you want to keep your customers engaged and paying your invoices as long as possible, preferably forever. This can also be useful for a firm that provides continuous service since there is no shipping involved too. And there is nothing wrong with it. But games have to ship. Continuous development without a hard shipping date is called "development hell" [1] in game industry.

From what I've seen Agile does not work very well here, at least on the engineering side. Design might be doing something similar to Agile on a small scale.

1. https://en.wikipedia.org/wiki/Development_hell