Video game industry practices
Video game industry practices are similar to those of other entertainment industries, but the game industry has been accused in particular of treating its development talent poorly. This tends to promote independent development, as talent leaves to form new companies and projects. Ironically, these new companies tend to become large and impersonal, adopting the business practices of their forebears, and ultimately mistreat their own employees and perpetuate the cycle.The most famous case of this is probably the "original" independent developer, Activision, made up of a small group of disgruntled Atari developers. Activision succeeded and grew to become the world's second largest game publisher. The people who started it, on the other hand, have long since faded into the shadows, either to do other work or to start over again with another new company. For example, one of the original founders of Activision, Alan Miller, left to found game developer Accolade (now Atari née Infogrames).
The problems developers faced in the past are somewhat different from those today. The Activision group, for example, made it a priority to give developers credit in the packaging and title screens for their work, a practice Atari had disallowed. Through the early to mid-80s, many developers faced the more distressing problem of working with fly-by-night or unscrupulous publishers that would either fold unexpectedly or run off with the game profits.
The largest problem today is still economic, and has to do with the publisher-developer contracts. For their work, developers usually receive up to around 20% of royalties, with the remainder going to the publisher. Instead of paying this fee, many publishers now offer to buy the studio outright. Very often the studio's original leadership jumps ship in the wake of a buyout, leaving the remaining employees to stumble along, falter, and get shut down after a few years. In both cases, the result is one-sided, and leads to further negative consequences: a big push to finish projects in time for the holiday purchasing window, and losing creative control to the publisher.
The focus on making ship dates results in one of the most stressful aspects of development: Crunch mode. Software development in general is prone to heavy loads of overtime work at the end of projects, when deadlines draw near and all the loose ends need tying. Games are no different in that regard, and have the additional burden of being tied to content (art, music, levels, scripting, etc.). The resulting weeks (or months) of chaos take their toll on the whole team, and probably are one of the leading reasons why people quit.
Loss of creative control is another negative consequence. Not surprisingly, people who make games want to have control over the types of games they make. But the publisher has the ultimate control over what gets on the shelf. Publishers, being large, profit-seeking entities, tend to follow market trends. The upshot: if one game is a megahit, a series of sequels and imitators will follow, often with reduced quality, and the game makers find themselves shoehorned into projects which they have little or no interest in.
The most promising effort at breaking this cycle comes from the smallest group, interestingly enough: small companies of one or a handful of people who develop and self-publish using the shareware model, over the Internet. Another reaction against the cycle is the Open Source movement, although whether freely made and distributed games can survive in the era of multi-million dollar productions remains to be seen.