T (they/she)
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But there are examples like Palworld or Helldivers or BG3 or others where smaller/independent studios release absolute smash game because they either 1) were bold enough to do something fresh, inovative and/or 2) absolutely love what they do and put so much more than “now the usual bare minimum” in their game it simply shows.

Smaller doesn’t make it a small company. You only gave examples of companies that aren’t small at all. Many small studios are facing bankruptcy even if they have successful games and depend on publishing deals to keep existing. Have you watched the Double Fine documentary about Psychonauts 2 development? If you haven’t I really recommend it, it is very interesting.

In the end, you need to have money to pay people wages. Game developers don’t work solely because they “absolute love what they do”.

Just to illustrate, there’s a dev of a game I am interested that post monthly reports of revenue on Mastodon. It just feels really weird to me that they end up getting 15% of the gross revenue. Should be a little higher if we take out refunds, but this sucks.

Sure, Larian is big (400?), but compared to some of the gaming industry behemots, it’s still small(ish). Arrowhead (Helldivers) should be like 100 people which is not that much. And wasn’t Palword developers studio like 30 people? I’d call that pretty damn small. Especially in contrast with the sales.

And of course not everything is fine and dandy in gaming industry. But where is?

T (they/she)
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The game I linked to you is literally made by two people.

It doesn’t change the fact that “30 people that made Palworld” is still really small studio. And that being small studio doesn’t mean you can’t make vastly successful game.

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