Eventually, yes. We're already seeing once big companies fall here in the west due to the sheer volume of apps overcrowding the stores. As for the triple A production costs, I agree. They're too high, but simply turning away because of that is quite frankly, a dumb idea. The triple A market is shrinking and the indie scene is getting far better and in my opinion, a much stronger part of the industry now. There's no reason why they couldn't produce their games without breaking the bank. Focus on certain elements and stick with that as a design philosophy.
Also, as good as the Fox engine is, why? Konami have about 3 games that are still relevant against the triple A market and developing an engine costs millions of pounds/dollars. It makes sense for EA as they'll use it throughout this gen on multiple projects (EA Sports/ frostbite for SW:Battlefront, Battlefield etc), but not Konami. Even Nintendo, Microsoft and Sony use unreal etc instead for their games.