I'm not going to argue that labor is a minor factor. It is the core cost driver.
Where I would slightly push back is saying it is location "more than anything else."
Location multiplies the cost, but scope creates the headcount in the first place.
If a game needs 1,000-plus people, five years of production, massive art pipelines, cinematics, animation, mocap, QA, localization, live-service infrastructure, patches, optimization, and marketing coordination, then the budget is going to be huge anywhere. Cheaper regions lower the burn rate, but they do not magically make a bloated AAA project lean.
So a better argument would be:
AAA budgets are largely labor budgets, and labor budgets are heavily affected by location.
I agree with that.
But location is not the only disease. It is the gasoline. The fire is the modern AAA production model: huge teams, long timelines, insane asset demands, too many managers, too much rework, and games scoped like they need to dominate the entire market.
Move the studio somewhere cheaper and you reduce the burn.
Build the game with half the people, half the wasted meetings, tighter scope, stronger leadership, and fewer years of churn, and now you are actually fixing the machine.