I always thought so, but then I look at Australia, which has instant runoff voting (https://en.wikipedia.org/wiki/Instant-runoff_voting#Australi...). And we too have almost a two party system (Labor vs Liberals), the other parties get a seat here and there, but the big two don't show any signs of going away.
That's strange. Here in Germany it works out quite well. Sure, we do have two large parties as well (SPD and CDU), but there are several smaller parties which do have significant results, and hence significant influence.
The classic example was the smaller party FDP some decades ago. Although SPD and CDU each had many more seats than FDP, both needed the FDP to have more than 50% of the seats. So whoever the FDP joined with, that party became part of the government, while the other became opposition. Some people even subjected that this was too much power/influence for such a small party. (Then, more smaller parties received a significant amount of votes, and things became even more complicated, but also more interesting!)
One difference might be that those two parties now use parts of other minor parties' platforms as a way to convince voters to consider them. If that were the case then at least there's greater breadth of political opinion/discourse.
Our compulsory voting is really "compulsory voting". It's "compulsory turn up to a polling station and get your name marked off". You can drop an empty ballot in the box, draw penises on it, or even just turn and walk out of the polling place.
Also, the OP underestimates the impact of the minor parties. While there are two major parties, one of them is a coalition between two parties (Liberals and the Nationals), and there's a significant block of smaller parties and independents that are big enough that when they vote together they can have a deciding vote on legislation.
The classic example was the smaller party FDP some decades ago. Although SPD and CDU each had many more seats than FDP, both needed the FDP to have more than 50% of the seats. So whoever the FDP joined with, that party became part of the government, while the other became opposition. Some people even subjected that this was too much power/influence for such a small party. (Then, more smaller parties received a significant amount of votes, and things became even more complicated, but also more interesting!)