The issue is that there is no obvious driver for growth at the moment and the industry has seen pretty obscene growth over the twenty years I've been part of it. That's made VCs very gun shy, particularly as a lot of the companies they've funded have nose dived pretty spectacularly. It's no surprise that the two recent successes Helldivers 2 and Marvel Rivals both come from publisher funding and for the latter has a very strong IP licenced for it. All of this is definitely causing a dramatic impact on the number of content producing studios getting VC funding and publisher investment in to new live service titles.

Outside of live service everyone is also looking for that new growth driver. In my opinion the chances are though we're in for a longish period of stagnation. I don't even share the OPs rosey outlook towards more "grassroots" developers. Firstly because they're still businesses even with a big name attached. Secondly because there is going to be a bloodbath due to the large number of developers pivoting in that direction. It'll end up like the indie market where there are so many entrants success is extremely challenging to find.