I think it comes down to inovation and or re-inovation. I see a game like The Witcher that was really done by a small team and then grew now into a huge AAA title after word of mouth went big. Sure, the graphics where pretty , but they took another engine to make it etc.. The devs there where very open on how it all went down etc. Now with their new releasing definitly in the AAA club, they kept to their roots of what made the first game great and in the end they will see that pay off yet again. Too many larger companies loose direction and push faster development. As a coder myself, I can say that is partly probably due to the same team getting lazy and sucking the dollar and slowing their own work down. I see this mostly in static companies that don't hire/fire teams. (when u got a good team why split it up?) Sadly this is also it's downfall. I think at that point it comes down to the leadership to keep the pace, give legit numbers to the publisher etc and do "their best" everytime.
When companies like this can succeed anything is possible, personally if I was in the industry I know of 4 games I would re-produce in an instant that where great in the day or missed the mark but now have such a following you could make a good value at it. Alas I am not, but new version of these with some graphic updates would be fun fun fun! Only isssue would be rights, I know 2 of them are not owned by anyone anymore (well at least not listed as protected at this point) and the other 2 not sure. Eh , I think anything is possible in this industry and for others to say the middle or any part of the industry is fail is just showing how short minded they are to begain with and won't last long in the business.
I find it funny that anyone that ever makes such open ended remarks or think they have the ulitmate answer are always wrong, there is of course a reason for that, but alas it just happens over and over and people will beleive it. As a game of 20 years now (eh probably longer, 43 now) I can say that I have seen the industry in all it's glory and all it's fumblings and I have to see one thing that says "This is the way it is". All it takes is a great idea and the strive to make it, the old saying is "if you make it , they will come" is so true even to this day. The issue with so many companies (in my personal opinion) is inovation or again re-inovation has lost it's flavor.
Take WoW, everyone has copied that over and over so much so people jump into a new version of an MMO and say, "whooope, new skins!, ok so umm what's so great about this game again?" and constantly bash the repeditive remakes of WoW 2.0. The industry is just to scared to invest into something "unkown" or "unproven" that it will , in the end be the "Middle Guys" that make the games people actually want. Will that happen all the time? No, I personally loved the concept of Elemental when it was first announced, my thoughts about it then where "wow, a new take on the old game of Fantasy Empires!" which for those that remember was a concept of sending your heroes below ground to adventure and gather resources and items to enhance your troops on top for large battles. This to me was the ultimate in fun and innovation in it's day. Elemental came close, but graphically for me it didn't even surpass that old title.
That brings me to the subject of graphics, while graphics don't need to be revolutionary that have to do well to represent the world you are partaking in. In almost ever instances of an interaction type of game , a descent graphic set is expected at this point. While elemental had it's own "take" on how things looked, the way it played out was most dissapointing. I got into the depthness of the elements in the game, but the looks lost flavor for me very quickly. I look at games like Ghost Masters for instance , the graphics while very old at this point still hold up well today. In that instance of a remake, I would be about upgrading said graphics, making new levels, adding new items and maybe a new innovation or two, but beyond that nothing much, the base game was sound, the concept was brilliant it was just a head of it's time. If you look at it now say on Steam, it's very popular indeed even today. So to me, graphics hold a place and while squar icons can represent things like our old strat board game would, it's nothing I would look for today as we are tecnically beyond such and I would expect more from any company.
In the end, it's really up to the company be it small,med or big to come up with a good concept they think will sell. It just takes the right leaders to make it happen and we see new titles still being produced with innovation and improvments, it has been slower as of late, but I think that will change. The market is learning that flooding one type of product is also bad for business. (see all the music games)... So as people come and go, I say the ones that will stay are the ones that understand quality and innovation. Bioware had this, they merged with EA, now we see that coming threw on their recent Dragon Age 2 title, I loved 1, 2 was horribly done and definitly rushed. If that is the "new" bioware, I can say I won't be a loyal subscriber as I was before, they lost the meaning of great gameplay. Startdock to me still holds this concept of being innovative and trying to be unique, which keeps me coming back. I might have not liked Elemental as much as I should have, but I still love all their other titles, this game came more down to preference. Sure when it launched it was buggy etc, but it was still a good game in concept and they kept up on fixing and updating it. After that, I just lost the want to play it out of my reasons above, but I still watch for new releases from them, they have a good team and they are trying to be "out of the box " in their way of thinking, which is good as well. Thou, re-inovations never hurt
PS. Sorry for the long writing, good topic, had allot to say