Games Industry May Shrink a Bit More

Seems the video game industry may have some trouble soon, according to a conference that just concluded in Edinburgh:
 
 http://news.bbc.co.uk/2/hi/technology/8201332.stm 
 
It says the combination of games with a large production staff take longer to produce, limiting income; multiple platform development also increases the difficulty for the same piece of software to get decent exposure; and the cost of licensing intellectual property is huge.
 
Europe seems to be stepping up the downloadable content market on their end, and it seems like there are a lot of good games out there that can be taken in digitally.  With the bigger titles we often get long wait times, which in itself isn't a big deal, but when you couple that with those moderate or big development houses being stuck with that particular task and not much other way to receive income, things can be a bit rough, especially when everyone isn't as willing to spend money on entertainment.
 
I don't think this spells doom at all, but I wonder if things might switch around a bit.  I think the biggest risk are the single-project, moderately sized developers.  The big developers can lop off a limb or two to save the body, getting rid of some of the smaller developers its taken over in order to make things lean again, while the very small developers usually are more fluid.  
 
Independent developers will probably be as strong as ever just because they probably have their own line of work, and tend to produce things when they can, rather than trying to stick to a schedule that makes or breaks a larger company.  
 
Digital distribution seems to be a great way to circumvent production cycle worries and seasonal sales problems, and it also seems like DLC for existing games is a great way for a development house to keep making money without putting forth a lot of effort to make an entirely new product.
 
Not sure how confident I feel about how things seem to be going, though.  Anyone else?