Says who? You?
When I look at how many bands are out there slaving away to write new music, then touring, and/or making albums it doesn't seem nearly as out of proportion. How many bands with finished albums have you never heard of? Compare with how many finished, polished games you've never even seen on Steam.
There might be a lot of games on Steam now compared to historical norms, but it's a tiny fraction of what you'd see with new books, new albums, or even new independent films.
The market for game-type entertainment is huge, and if people have an astonishing level of choice when it comes to how to spend their time, so much the better. We don't need indie games to hit the $100MM mark to be considered successful. Many developers would be happy if their game pulled down $10K.
We're used to games where you'd have to invest $50 and want dozens of hours of gameplay for it to be worthwhile. Now things are to the point where a $1 game only has to amuse you for a few hours and it's paid for itself.
The biggest problem in the indie game space is not the number of developers, but discoverability. The structure of stores, the methods used to promote them, they're all relics of when there was a handful of games that would get released any given month. These need to change to support a broader, more rich environment where you might have hundreds of them.