You make good points. But let me make a couple of other points that complement what you said and bring things forward a bit.
CoGs needs to make a profit to stay afloat. Of course, it is a business, if they can’t make money, they can’t eat. Having said that, my perception is that CoGs is re-investing everything they make into hiring more people, not inflating their own paychecks (if this makes sense?). I could think that the idea might have been “if we hire more people, we can relax a bit more, and not be so busy all the time” (this is the same foolish way of thinking that was in my head whent when I started accepting PhD students, and I’m sure at CoGs they are all as busy -if not busier- than what they used to be).
So, they have their business model, which is necessary for them to stay afloat. It is a VERY generous deal that they give to authors (and I will continue to emphasise this point, I only get 10% royalties on my academic books… and to get to write those books I had to publish countless journal papers throughout a period of 10 years, so I was not a “first time” author…), but I’ll move onto my next point.
Yes, I spent around 600 hours to write Tokyo Wizard (my estimate was that it was 3-4 hours per 1,000 words of code and text… typically 1 hour per 1,000 words of text, plus 1 hour to code it, plus another hour to tidy it up, plus another hour for post-processing, reading it all, etc. I didn’t keep exact track, but that was my feeling, and I’d be interested in what others have to say about this). So, that would have been 15 weeks working full time (about 3 months). My game hasn’t done so badly (probably it is a middle range game that sells nicely enough, but not one of the famous games around here, though ratings on it are not so bad), but so far I would have made more money working in McDonalds (eventually as sales continue this feeling will probably decrease, and maybe by the time I publish several games each of them will bump the others, but you have to keep a long-term perspective in life. The established names around here, like Lucid, Jason, etc, have all slowly built up their reputations!)
But, that is NOT why I originally wrote the game. It was a hobby, I really enjoyed writing it, and it was a LEARNING experience for me. My next game might sell better, and it might start to all make more sense financially. However, not all of us are amazing writers (and I want to emphasize that I’m aware my writing style is NOT the best around here, as we have some VERY talented authors in CoGs and HG), so you should take all these things into account (in CoGs and HG you are starting to compete with games that are getting better all the time. Something that might have passed as a good game years ago might get slammed by readers, who have grown used to reading things of ever increasing quality. And this is a good thing overall!)
So, to conclude: CoGs offers a very generous deal, but writing is a difficult business! Making money in life isn’t an easy thing, and it is not here either. I think most authors here are still doing it as a hobby, though I believe one or two might be making enough money that they can be semi-professional (professional?) by now, but that takes time and dedication (like everything else in life!)