Game companies have a hard life, no matter their size. Games are a hit-driven business, and it's hard to exist on merely "good" sales. The makes companies buy each other, or merge. EA bought BioWare/Pandemic, Activision and Vivendi merged, Rockstar just bought Mad Doc, and on and on. Companies want security in this fickle, unpredictable business.
If a AAA title takes 3-4 years to develop, will the genre it's in even still be selling well, or at all, when it's ready for release? Will systems have changed enough to make your formerly excellent graphics look dated? No one knows, and it makes executives and VCs nervous.
To assuage their fears, they try to make big companies out of smaller ones, to have a divers base of cash cow games, to help support divers studios, any one of which might put together the next craze. Small developers often like it, just to have a little certainty that their offices will continue to be open for the foreseeable future.
But it sort of sucks for games. Mergers mean money, and money hates risk, so games often get much less risky when the company is over, say, a hundred employees. When your risky decisions have the potential to cause you to lay off lots of good folks, trying for the next Katamari Damacy is not a path man large companies take.
So grats to Mad Doc for ensuring their future. I hope it's not GTA ports for the rest of your days.
