Well I dont think they are going in the wrong direction, they sell lots of their games and making profit is the reason they exist. It's like fastfood in that sense.
Is it limiting their potential? I really dont know, but I never played a game which wants me to expierence a meaningfull story that I enjoyed.
For example let's look at something beloved like TLOU. Did this really benefited from being a game?
All I think is they should have told the story through a movie, instead of ugly realtime graphics. It works as a game sure, but wouldn't another medium deliver a superior expirence?
It's also my own fault in which I approach a videogame compared to other noninteractive media. When watching a series I feel like: "Hey lets look at these characters, what they are about and what they are up to", but when I play a game then the protagonist is just me, my avatar.
No game ever succeded in making me care about the character behind that.
My opinion? Hell no! This is the main reason I mentioned TLOU among many others as an example of mature game, in the previous page.
You, indeed, approach videogames and noninteractive media differently than me, I do the opposite. I try to leave myself get into the story and the characters of every game I play, I try as much as I can (and I succeed if the game helps me...) and I don't think "the protagonist is just me, my avatar", I think "omg this is awesome, I feel so much like *character* right now".
While watching a series, I feel like "oh right, these guys again, I wonder what they're up to *yawn* ", which means that I keep my distance and not voluntarily. It's very hard to get involved because I'm just watching passively, it's a given fact and this is why a movie like Now You See Me managed to play me so easily (and this is why I love it, an example of mature movie to me).
Playing TLOU means creating a link with Ellie through Joel, without this link there is a lot that I'd miss and that's what would happen if TLOU was a movie.
Same goes for many others game: Bioshock's "revelations" work because they're NOT a movie. MGS3 worked because it's NOT a movie, they all know their nature of games and they all got the potential out of this.
A more concrete example: When I have the power of interactivity I want a survival game that challenges my reflexes, spartial thinking and resource managment and not a story about some guy and his daughter disrupted by pretty much trivial gameplay. I'd much rather read/watch the waling dead instead.
Can we really have both? Wouldn't the narrative break down if you give the player the options necessary to deal with more evolved gameplay? Like what if I want to shoot the daughter, one less mouth to feed afterall?
That would be great but it raises a problem that no other medium has: how can they do that while keeping it playable? Unfortunately or fortunately for us, gaming is directly connected with tech, it's not just a matter of writing or rolling a camera and rendering some CG.
Let's take your example: you kill the daughter, fine.. now what? The game must go on I guess, but what if the daughter had an important role? You can't cut it out of the game, so they could make the daughter a useless characters (bad decision) or they could program and write a totally different version of the story which is easy to say but not to do.
There're games that give you more freedom, like Fallout, but there's a reason if your kills don't influence the path of the story that deeply (it can become slightly different but that's all).
Another example, Heavy Rain or Beyond. No matter how many people you lose, story is going in one single direction even if with 20+ (slightly) different paths. Limits are always there, story can't be procedurally written like levels after all.
What you're asking for, then, is a game without story or something like DayZ, correct me if I'm wrong.
This
GamesRadar article is a good place to start.
Good reading, thanks!