I think it’s less that they intentionally under deliver, and more that how the actually run leads to bad products. The executives and consultants brought in try and run studios like they’re software companies. Which, yes, technically video games are software, but they’re more than that.
With a lot of software, a short turn around is important if you want to make sure your product isn’t outpaced by a competitor before it even launches. bugs can be patched out over time so shipping with a few bugs is fine so long as you’re getting to market as soon as possible. Breaking the project up in to lots of small items that can be independently worked on without interfering or relying on other items means you can expand the team easily to keep up with deadline.
On a video game, consumers care more about the experience of the released product and less about it being the most technically advanced. Huge bugs at release mutes any excitement, even if the issues are patched out later. Multiple teams working on a bunch of items in parallel will struggle to make a cohesive experience and the design guidelines put in place to make this possible will mute creativity. A handful of cohesive long quest lines makes for a better RPG than a 100 little independent quest scattered over the map.
Better to have smaller teams that work over longer time frames and release a product when it’s ready, 150 million dollars will make a much better product with a 100 person studio over 6 years than a 300 person studio in 2 years.
I think it's down to western studios being so investor driven. The devs estimate it will take five years, so the PM tells the C-suite it will take four years, so the c-suite tells investors it will take three, who then pressure the C-suite to make it two. Then everyone is shocked, shocked, when the end product is buggy, slap-dashed slop.
Baldur's Gate 3 gave me one of the most appealing experiences I've ever had playing a video game. It literally felt like a breath of fresh air coming from the rest of the industry. I tried to get into Divinity, but hated the combat so much I stopped playing as much, and then dropped it. I still didn't love the combat in BG3, but damn, the rest of it literally blew me out of the water. The cinematics of interactions with NPCs, the freedom to do what the developers didn't intend for you to do, but still allowed it anyway, and so much more. An actual amazing game that seemed to push what SHOULD be the norm for games going forward (RPG wise), but that requires actual writers, actual planners, and actual people who care about video games. That's not something the big "AAA" studios like to have on their teams, because that costs money.
Making smaller games isn't a bad thing. Every game being a BG3 would be completely unsustainable. Sure, that game was a great accomplishment, but also imagine if they'd made the game that size and it was bad. It would've probably sunk the studio. I'm all about more A and AA games. Not everything needs to be a 300 person effort.
I feel like the death if the AAA industry has been dragging on for a while. Every time the "only indie studios can save gaming" feeling hits me a new God of War or Knack 2 or Doom comes out.