This has an easy solution. If the middleware cannot be used in a new regulatory environment then it will either die or adapt.
We all agree there is a foolproof method to fixing all bugs - delete all the code.
We also all probably agree that isn't the optimal balance.
Larger game studios would likely adjust as you say. However they too could adjust in such a way that they only offer subscriptions within California as that appears to exempt them from this rule. Many outcomes are possible beyond simply adjusting to the legislation in the way you are suggesting.