[megrimlock]

Right -- big publishers' size and distribution model requires them to focus on outsized wins. Their overhead is too high to take on the many smaller projects they would require to feed their cost structure. Smaller traditional publishers face similar problems, having to make few and careful bets and so often having to sell out to survive.

Valve provides an interesting contrast here: with Steam/GreenLight they run a scaleable distribution channel for large numbers of small indies, taking a percentage without making particular and huge bets. It's like an index fund vs. managed fund, where the latter does intense research into specific options. Often that research in anchored in comparative analysis where someone has proven a juicy market exists (ex: Guitar Hero having a million clones in its wake).

[teamonkey]

It's easier for publishers to produce multiple, smaller titles. Economies of scale apply to some extent. And they do! But mainly as part of a broad portfolio.

Valve are not typical developer/publishers. They are the gatekeeper, like Apple, Microsoft or Sony. Everything they do is to bring customers in to their walled garden. Their games have effectively infinite budget and can be seen as loss leaders.

Greenlight isn't amazingly helpful for small indies because it requires your game to hit a critical mass of popularity like kickstarter. Unlike kickstarter you need to have already developed the game and have it float about on greenlight for 6mnths+ before you see any return (after Valve's XX% cut of sales).