As Norris said, people with enough money to invest in a medium range games catalogue, prefer to risk it all (in their eyes it's a smaller risk, but those eyes belong to morons imo) by developing big games based on whatever is popular (sandbox games, military shooters, ect.) regardless if the market has room for it.
It's a bubble, and the sooner it bursts the better. Will people lose their jobs? Yes, but then they can start their own software studios making smaller more profitable games. Look at the mobile revolution. Now that SteamOS and android and stuff are coming to smart TVs, you can be sure there will be a huge market for small budget "couch based" video games in the future.
I'm not worried one bit. I'm just warming up the pop-corn to see all the investors crying when this market implodes.
Sega has published dozens of interesting medium-sized games but many of them have been flops. Valkyria Chronicles was a flop. Yakuza was a flop. Madworld was a flop. They are certainly trying but they are still trying to reorganize and it takes time.
This paragraph just makes me sad

. BUT, I bought all those games (well technically someone else bought the first 2 Yakuza games for me, but it still counts), AND Vanquish, so I did support their efforts

(though in the end I only liked Valkyria Chronicles, and ending up selling the other 2 from Platinum)