It's a way to inject "office heroics" via fear, but it also has its limits. Once the burnout sets in, everyone is just part of the death march at that point, seeing the product or the company to its slow demise.
Case in point is AWS. I've been reading they are a PIP factory for the last couple of years. Doesn't seem like they have a major issue hiring (partly due to lack of a competitor who is doing better).