I'd argue the entertainment industry is reaching a ceiling on the quality that inflated budgets guarantee. Microsoft could throw a billion dollars at Halo 6 and then get an unfavorable response because Master Chief doesn't get the shotgun early enough in the campaign.

Somehow I doubt merging once-competing-now-heavily-downsized studios will be a recipe for success (see also the merging of Bethesda and Obsidian Software). Not that managing an army of game developers among one of the world's largest armies of developers is an easy task... but it does seem like the key is smaller teams with more creative liberty (hopefully working without the burden of an existing IP with such lofty expectations)

it is easy: give up on hardware and focus on games

Their only goal is to be more profitable.