Oh, I would not disagree to your diagnosis of an enormous regress or, actually, a complete timeout of certain types of games - we nowadays call 'old school' (the term is quite concerning, isn't it?, even if it's used as 'renaissance of old school', at least expression of what we talk about) - for a time span of 10-15 years (if your agreement wishes refered to that). And related to these 'old school' games D:OS 2 and D:OS are a better form of, well, what we call 'modern rpg' (technically improved products orientated on real or claimed attributes of players who game industry primarily focusses on, tendencially even Studios like Larian). Pillars of Eternity approximates more (speaking of the whole desgin); Torment: Tides of Numenera will probably be a step further. And there's a lot of interest in this game, supported by more than 5,000,000 dollars.
And Planescape Torment, Neverwinter Nights and Neverwinter Nights 2 belong to the best sold games on GOG; they must have been sold several million times since 2008 (when GOG started, as far as I know); so maybe the greatest success of these games was after the 'death' of old school games, and it is more than the nostalgy of the 'old generation' of players. The prices are different of course, so we don't know how many would buy such games on full price. But I suppose the number of players who are interested in these games has increased in absolute numbers or can be activated (there are just more players with interest in games like Division, Counterstrike, Battlefield, Diablo 3,...). Of course it is an uninteresting number for greedy publishers but I would not neglect this existing public for 'old school'-like games. And crowdfunding is a fantastic and very new possibility for developers to get enough ressources to produce and improve such games without too much risk and, of course, without being (too much) dependent from investors, publishers and such. There has been a frustrating emptyness but the current process is good. If some skilled developers manage to create really good games of this genre (or these genres) and show that they can have economic success with it and don't risk to ruin themselves there will be more to expect.
And in general: there has been much innovation in the first stadium of the medium. 'Naturally' the market grew and got explored. New agents joined the 'game', interested in making big profit, the system got restructered, certain consuments and types of games got more visible than others (due to statistics, marketing strategies, games media that get more and more commercialized as well etc.). Different degrees of visibility produce biases; sometimes I also think there is and there will be nothing more than those games I named above, and Hollywood, and GNTM and TheVoice and these GotTalent-Shows, and McDonalds, and Apple and google and amazon and facebook and so on. But there is much more than that and more variety we think and certain companies try to make us believe.
And back to games: there are new forms of financing and distributing games (also of visibility) that give some developers back their independence and creative freedom and their public and allow to address a public that has been neglected for certain and different reasons, and this public will probably grow - despite of some dominant cultural influences on people. Games are even going to become an equivalent subject of sciences, their status changes (films, or novels, had the same problem). And there will be new generations of developers with different approaches, knowledge and skills. It's not as bad as it seems when hearing all these voices complaining about things they don't know or understand, don't want to know, try to know or what else, reading all these statistics and medial reports, seeing this flood of uniformed games from certain companies that try to control the market, to direct people's taste, to integrate their systems into social structures, to direct their behaviour, to form their reality and to milk players as much as possible, abusing their emotional and sometimes even existential relation to games. Not for the players, but for the money.
That all exists. But it's just part of our reality. Unfortunately (speaking of those companies who lie at players, gather their data, abuse their interests and their needs just to maximize their profit, raising prices, selling highly overpriced DLCs, implementing microtransactions and still claiming it to be for the players or 'necessary', obscuring their real interests and the unnecessarity of DLCs, microtransactions etc. under the condition of player friendly and less max profit orientated principles - the market is huge, you can still earn more than enough money without doing all that, but they have the will to expand, to get as much as they can) - unfortunately it's a very dominant and loud and visible part, but it's still part, not totality.
I'm not sure how game industry will develop and if there will be ways for certain games to get produced (not just smaller indie projects) and for certain developers to 'survive'. But I'm not so pessimistic that there are and will be market segments that allow both to create unique games and to have enough success to be happy.
