The issue is not new, never has been; games being sent out with major flaws, needing constant updates, has been a staple since at least the 90's.
As the industry has progressed and the games have become internally more complex, it has gotten better/worse depending on the gaming engine development cycle we are in. Older gaming engines tend to be more stable, then newer, but newer is always adding bells and whistles older systems do not have. It is a long way from Garry Kitchen's game maker. Before that came out and well after to be fair, each game had its own unique game engine, internal to the game, developed from the ground up. All be most were fairly simplistic.
All those bodies, yes the game industry needs lots of bodies. Most of those 1,000's of people hired then laid off, are not the core programmers, core graphics designers, managers or even office staff; they are game testers.
They are there to test parts of the game while it is in development, then are let go once the game is developed, enough. You can do two things to gain those bodies; hire contractors house or outsource contractors. Big companies tend to do more in house hiring as they have the robust HR staff to handle all of that, smaller companies do not so they need to outsource to another company for those bodies due to their lack of non programing oriented staffing. Game testers make minimum wage to 30 bucks an hour depending on what they are doing, their position in the game testing hierarchy and their qualifications. It is a job even a kid still in high school can get, but it only lasts as long as the game is in development.
Also those "Not publicly traded" game companies, where do you think they got their cash flow from to start their company and bank roll the development of the games and how much of the companies do you think are 100% owned by the people who started the company?
Black Rock is financial company that provides Angel investor services amongst other service, which is providing capital to a venture to so the venture can create a viable working company/product. In return those investors bankrolling the company get a percentage of the company in return for the cash. Venture Capitalism.
There are of course exceptions, like
Valve which owns Steam. But Valve was bankrolled by 2 veteran Microsoft employees who had the wherewithal to do so.
