I don't work in the mobile-games space myself, but it feels to me like the real problem here is the massive collapse in accepted prices that market has seen.

If people were willing to spend $10 on mobile games -- which is still 80% less than what AAA titles on console and PC cost! -- the "hit-driven" model he describes would be much more tenable. But when everything has to cost 99 cents there's just no way for anything other than a truly massive, once-in-a-lifetime hit to be worth it financially.