I think Zynga might not be a good example, in my opinion it's a company that doesn't care about their customers enough. Any company takes that road will face the similar results.
I'm not exactly sure if it's a market with low margins also, with mobile phones, cheaper PCs and more accessable consoles the gaming business is getting bigger. In every business there're big players, but look at SuperCell, in 3 years they were valued more than 4 Billion, actually SoftBank bouth 51% of Supercell for 2.1B. Wargaming, Riot Games are the other examples.
I think we still couldn't figure out how to iterate quickly and find winning games, like we did in lean startup model.
As an example you can manage to develop a game and do a soft launch to see the retention values for under 50K USD, talking about mobile games. So with a very basic calculation a small studio can iterate through 8-9 games with 500K USD investment, and I think optimizing these iterations are also possible.