No, demos negatively affecting sales has been known for years now. Even studies as far back as 2013. This isn't some "your game is just bad" situation.

Besides, even if it was, it's not like developers set out to make a non-compelling game. Like woops, let me just press the "compelling" button before shipping!

Is it a losing strategy if the revenue increases? Consider how encouraging gambling on in-game items instead of making better games has served the mobile gaming industry.

Unfortunately the world is not just and consumer-hostile behavior often ends up being more profitable.