Some time ago the elaborate preproduction model Hollywood uses for films was adopted for games. Films don’t typically have to create the technology needed to complete them. If the technology can’t be made to work or where the infrastructure to support it is impractical to put in place, all that preproduction is pretty much wasted. A side issue is the difficulty in predicting how long it will take to develop needed technology. This is one area where Hollywood is not a good model for games.

Iterative development is a much better way to run projects. Scrum, which delivers demonstrably working components at the end of each sprint, is a more practical way to go. I am speaking here of actual Scrum and not the “Scrum-like” bastardizations which skip the requirement of delivering something that works. It also, as you note, allows for quick responses to changing market conditions.

In some instances it would be better to solve the technical challenges before making large investments in art, design, stories, and other nontechnical assets.

This next gets away from Project Management, so it is not something for which I can claim any particular expertise.

The problem is with the financial model. I don’t see players paying to play a game that is in development and I don’t see players who have been allowed to play for free being very happy when they are expected to start paying.

Following up on one of your suggestions, it should be possible to release the beginning portion of the game in a reduced time frame. Players could pay a small amount for that. New players could always start with the limited game play at the low starting price. As more is added to the game, players could access that for an additional fee that would be kept competitive with other games. Players could be given free access to new areas for a limited time, or as a reward to loyalty, etc. As stated, this is not my area.

I think you are on the right track as this is a challenge the games industry cannot afford to leave unmet.