100% agree op, but the real reason we see shit compared to 10, 15 years ago isn't diminishing returns, it's a bit more sinister:
More gamers than ever means you can release complete shit and have a large enough audience to sustain it. Think of how 'few' gamers there were in 1990 or 2001 compared to today, and how many of those titles were considered massive hits with a much smaller audience.
The most sinister reason though, is that the power in your console is no longer used to power your games 1:1. There's ad trackers, cookies, always online, constantly connected cameras, OS's up the wazoo, BT, WIFI etc etc. It's the reason that consoles have struggled to run Crysis from 2005, and why the PC space hasn't evolved at all since 2007. Sorry PC master race, you can throw specs at me all day long, your exclusives nowadays are just shinier verisons of console games. Sad but true.