It's amazingly difficult to make a game that gets traction these days because of all of the competition, but it is definitely getting easier to make money without license fees and subscriptions if you manage to hit paydirt. There is a gold rush going on to start new game companies and make new games to run from the browser (java or flash mostly - maybe Silverlight too in the future). The newer games are getting more and more sophisticated and free to play.
I guess what I'm saying is that I think there is a window right now where indies can get pretty far with a low-budget game before this new space is completely swamped.
I don't think we'll reach that point. At least, not very soon. Digital distribution has removed part of the need to cater to publishers. It takes a lot of work for a small team to create a game, but at least it's feasable to do so today. A few years ago, it wouldn't have been. So I don't think it'll be 'game over' anytime soon for indie developers, especially with a platform like Steam to advertise their creations on.
That's a great point. The publishers and huge game studios will continue to have their market, but the barriers to entry for small and mid-size games have definitely crumbled. It's easier to create, distribute, AND monetize the games than ever before.
I guess what I'm saying is that I think there is a window right now where indies can get pretty far with a low-budget game before this new space is completely swamped.